California and Wall Street Are Back!

San Jose, California
Bernd Geh | Getty Images
San Jose, California

Is it 2000 all over again?

The Best Performing Cities Index from the Milken Institute may have a familiar ring to it.

The country's top metro area in 2012—based on jobs, pay and technology—is San Jose, Calif.

"Silicon Valley is Back!" the report's cover page declared. It has been over a decade since the region ranked first on the index. Last year San Jose ranked 50th out of 200 large metropolitan areas.

(Read More: Most Affordable U.S. Cities.)

The Milken Institute reported that for every job added to the tech sector, five outside jobs were created.

Coming in second place on the index is Austin, Texas, another hub for tech innovation. The Institute said Texas metro areas remained strong performers in 2012, "but did not dominate as much as they did in recent years." It claimed a few regions in the Lone Star state lost ground for, among other reasons, "softness in the natural gas boom."

Alan Copson | Photographer's Choice RF | Getty Images

New York made a huge jump of 64 spots on the index to come in at #11. "As the financial industry stabilizes, other sectors are surging: nearly 500 start-ups have been funded since 2006, and film production has grown 31 percent over the past five years."

(Read More: America's Top States for Job Creation.)

One of the biggest surprises, said Milken Institute chief research officer Ross DeVol, is the rebound in manufacturing in America's heartland. "Among this year's biggest gainers in large metros are Holland-Grand Haven, Mich., leaping 108 slots to #40." Other "hotspots" moving up dozens of slots include Minneapolis-St. Paul, Gary, Ind., Warren, Mich., and Indianapolis.

The index does not take into consideration quality-of -life issues like commute times or housing costs, believing instead that the focus on jobs and wages are better reflections of economic growth and its "critical importance to community vitality."

(Read More: The World's Best Places to Live.)

Nothing may show the recovery is moving along better than the index's top pick being a city in hard-hit California. "People expect tech to be one of the most dynamic sectors of the economy," said DeVol, "and it was."

—By CNBC's Jane Wells; Follow her on Twitter: @janewells