NASHVILLE, Tenn. (WKRN) — The Nashville area fell 14 spots on an annual list of “Best Performing Cities,” which tracks the economic growth of communities across the United States. The Milken Institute ranks Music City in the 20th spot for its 2025 report, down from number six last year.
“There are a lot of other city measures that you could have that correspond to quality of life, like access to public transit, crime, all kinds of things,” said Milken Institute Associate Director of Research Brock Smith. “We decide to focus on kind of economic performance, and then how widely those economic gains are shared.”
Last year’s report stated Nashville’s top ten ranking was due to competitive wage growth, continued employment opportunities and the fourth largest high tech GDP growth among large cities.
“We have 13 metrics that are divided into three categories: One is labor market performance. Second one is high tech performance, and the third one is access to economic opportunities,” explained Smith.
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He said Nashville’s dip in ranking is pretty much entirely due to that short term job growth metric, which measures employment growth from July 2023, to July 2024. This year, Nashville fell 130 spots to 150.
“That tends to be a pretty volatile measure. It’s entirely plausible that that bounces right back up and Nashville goes back in the top tier next year, or it could be, you know, the start of a trend,” he said. “It’s definitely something policy makers should be paying attention to and try to pin down what’s going on in the last year, too.”
He says another challenge for Nashville’s economy is housing affordability, where its ranked 88th.
“Nashville does still respectably in housing affordability, but it did see really big housing price increases in 21 and 22 — that was the whole country did, mainly, but Nashville is even more than average, and so that’s one thing I think policy makers should focus on if they want to bounce back, try to make sure housing affordability doesn’t kind of slip away from them,” said Smith.
The report stated that the lack of affordable housing is an issue that’s widely felt throughout the U.S. with median house prices approaching nearly six times the country’s median income. People are now moving even more often to cities where they can live without spending more than 30% of their income on housing.
“The one we’re really focusing on lately, and again, it’s becoming more and more nationally prominent, is housing affordability. And it’s hard to say exactly how that correlates with other things. There’s probably a time lag in how a lack of affordability impacts the labor market down the road,” Smith reasoned. “It’s kind of a tricky thing to pin down, but we do just think it’s we’re starting to see these trends of the like largest and most expensive cities really taking a fall in the rankings.”
Nashville is in their large cities category. Raleigh, North Carolina ranked first this year. Communities in Utah were number two and three on the list — Ogden-Clearfield and Salt Lake City. Next was Huntsville, Alabama, less than two hours south of Nashville. And Colorado Springs was number five.
“We see places like Huntsville, Alabama and other places kind of in that area rising to the top of the rankings. And the other big one has been the Mountain West. So you know, people fleeing California because they can’t afford to live there, going to places like Ogden, Utah, which was second in our rankings this year, Salt Lake City, various smaller cities in Idaho and the small city portions of our rankings are but Idaho is pretty dominant among small cities,” said Smith.
Despite the challenges of work force growth and affordable housing, the big picture shows Music City’s economy still has many strengths.
“Overall for Nashville, the kind of big picture, it does very well in growth, in kind of the most important sectors,” said Smith. “When I look at kind of sector by sector growth, Nashville had the highest shares and and really strong, like five year growth in the finance sector, the information sector, professional and business,” said Smith. “Those tend to have a lot of high tech employment, which with a lot of opportunity for future growth and high wages.”
