Study: Tourism and manufacturing drive top-performing small town economies

Tourism sets the pace in many of America's most robust small towns, a new report by Bentonville's Heartland Forward finds.

State of play: Seven of the top 10 communities in the study rely on tourism, but manufacturing is still a major contributor to local economies.

• As remote work became normal during the COVID-19 pandemic, some communities that attracted tourists leaned into the industry to boost economic growth. Some of those attracted new residents interested in a quality of life not found in metros.

Driving the news: Heartland Forward ranked and evaluated 527 U.S. micropolitans — cities with a population of 10,000 to 49,999 — for its biennial " Most Dynamic Micropolitans " study.

• The group works to advance economic success in the middle of the country, and its research is often used to help communities set new paths.

What they did: To rank each city, researchers used growth in average annual pay, employment numbers, GDP, level of per capita income, young-firm employment share, and share of degreed workers employed at young firms.

The big picture: Areas that count outdoor recreation or manufacturing as part of their economy's makeup performed better than others, researchers found.

Zoom in: Somewhat of an outlier, Los Alamos, New Mexico, ranked No. 1 this year and in 2022's report due to continued expansion of the Los Alamos National Laboratory . The Department of Energy awarded a $2.5 billion contract to Triad National Security.

• Branson, Missouri, leaped more than 350 spots to land at No. 119 due to increases in tourism.
• Sevierville, Tennessee (No. 23), southeast of Knoxville, is developing a $75 million, 200-acre project called The 407: Gateway to Adventure to lure travelers from Interstate 40.

Meanwhile, cities in Arkansas were bolstered by manufacturing, which accounted for 10% of the state's non-farm jobs in 2022.

• Blytheville (No. 54) benefits from freight movement along the Mississippi River and steel manufacturing. Magnolia (No. 243) in the south saw an increase of 19% in average annual pay and a 13% increase in its GDP, tied to bromine production and the potential of a lithium extraction industry.

By the numbers: Of the 527 micropolitans evaluated in the study, 325 are located in the heartland.

• More than half (111) of the top 200 most dynamic micropolitans are heartland communities; 49 are in the top 100.

What they're saying: "As quality-of-life and cost-of-living factors make urban centers less attractive, micro regions have the opportunity to attract highly skilled workers to settle; in time this could draw firms and investment capital that can help bolster economic diversity," the report's authors said.

Go deeper: Read the 2022 study .