AMERICAN DEMOGRAPHICS 2014

NORTHEAST: PICKING UP Speed

ECONOMIC OVERVIEW

The economy in the affluent, densely populated Northeast region is definitely on the mend. With a declining unemployment rate that is finally on par with that of the overall U.S. and a growing consumer confidence, things are only looking up in this burgeoning region.

“What’s happened in 2014 is that consumers finally have more spending power,” says Ken Goldstein, economist with The Conference Board, an independent business membership and research association. “They are seeing improvement in their balance sheets and, thus, have more willingness to spend more today.” This move is helping the Northeast’s economy sustain recovery, he says.

JOBLESS RATE

Downward movement is the trend when it comes to the Northeastern Unites States’ unemployment rate, which finished at 6.1% in June 2014. This is a long way down from the region’s 10-year high of 8.9% in February of 2010—and a continuous decline from subsequent years.

The jobless rate in the Northeast was 8.4% in June 2012 and 7.6% in June 2013, according to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS).

NORTHEAST STATES

The New England area continues to see the lowest jobless rates of this region—and some of the lowest in the country. Vermont boasted an impressively low unemployment rate of 3.5% in June 2014, according to the BLS.

In addition, New Hampshire nipped right at the heels of Vermont with a similar success story of a 4.4% jobless rate, and states like Maine (5.5%) and Pennsylvania (5.6%) were not far behind.

Other states in the region—such as New York (6.6%), New Jersey (6.6%), and Rhode Island (7.9%)—experienced slightly higher, but still recovering, unemployment rates in June.

CONSUMER CONFIDENCE

While their region’s jobless rates dip down to more palatable levels, residents are keeping their optimism in check. In the Northeast’s Middle Atlantic states, the Consumer Confidence Index (CCI) was reported as 71.6, a number that is significantly lower than the country’s overall CCI, which was 83 in May 2014.

Confidence is up, however, in New England, where the CCI rang in at 83.6 in May 2014, according to The Conference Board.

Northeasterners also kept their expectations in check. While the Expectations Index rang in at 84.8 nationally in May, the Expectations Index in New England was 83.6 and 71.6 in the Mid-Atlantic, according to The Conference Board’s Consumer Confidence Survey.

COST OF GOODS

The Northeast has experienced a slight increase in inflation, with the Consumer Price Index (CPI/the prices paid by urban consumers for a representative basket of goods and services) for all urban consumers up by only 1.9% in June 2014 over June 2013, according to the BLS. During this same period, the overall U.S. CPI only increased by 0.3%.

RETAIL REAL ESTATE

While the Northeast’s asking rents are increasing ever so slowly, its retail real estate vacancy rates are having a difficult time going down—and staying down.

VACANCY RATES

The Northeast reported the same vacancy rate for the first quarter of 2014 (8.8%) as it did for the first quarter of 2012, according to according to Reis, Inc., a New York City-based firm that provides forecasts in the retail real estate market.

While this number is still better than the first quarter rate of 10.4% for the entire U.S., its stagnancy shows the true state of the real estate market in the Northeast.

“Overall, the Northeast is pretty strong, especially in the New York metro area—to a lesser extent Boston—but it’s certainly not as strong as boom times,” says Ryan Severino, a senior economist with Reis.

RENTS

Asking rents are actually moving much more steadily in a positive direction as compared to the last two years. In the first quarter of 2014, asking rents clocked in at $20.91 PSF, which is a slow but steady movement in the right direction over the $20.54 reported in the first quarter of 2013 and the $20.41 reported in the Q1 2012.

METRO MARKETS

While the Northeast has a lot of behemoth cities and major metro markets, recovery in this busy, densely populated area is still slow.

CITIES TO WATCH

There’s no shortage of cities or urban sprawls in the Northeast, but which are recovering the fastest?

With declining vacancy rates, hubs like Northern New Jersey (5.4% vacancy), Boston (6.6%), and Baltimore (6.7%) appear to be on the upswing, according to Reis, Inc. Each of these areas also saw a solid decline in the jobless rate in May 2014 as reported by the BLS—Boston (5%), Baltimore (5.5%), and Northern New Jersey (6.3%).

Maine’s Portland/South Portland area was also a standout on the economic front—its jobless rate dipped to 4.6% in May 2014 (compared to 5.5% in 2011), according to the BLS. Other cities that exhibited desirable recovery include Philadelphia, with a jobless rate of 5.9% (reported in May 2014) and vacancy rate of 9.4%, and Pittsburgh, with a jobless rate of 5.3% (reported in May 2014) and vacancy rate of 7.9%.

SECOND PAIRS: THE SUN ALSO RISES

The Northeast shares the top spot for second-pair casual eyewear sales this year with the South, both reporting 11%. But this represents a 4% dip since last year and a 10% dip since our reporting started in 2010. What is on the move here for extra frames? Sunwear grew by 3% to 71% and clips returned, up from zero to 1% of second-pair sales.

FASHION TRENDS

Fashion is a driving force in this region, which has a significant amount of affluent and professional residents. Quick to adopt trends in their chicest incarnations, the Northeast embodies sophisticated style.

One of the best fall trends for the Northeast will be the academic look, which pulls in collegiate looks such as menswear fabrics, regimental stripes, and fisherman knit sweaters.

“The Academy Trend is also about a more active lifestyle shift,” says Roseanne Morrison, fashion director at The Doneger Group, a trend forecasting service. “It’s about athletic looks and yoga clothes for the weekend—we are seeing the influences of sports really dominate casual sportswear.”

In Focus

LENS MARKET

FREE-FORM: Though the Northeast led this category last year, it’s being outsold in premium lens designs in 2014 by the three other regions. While the rest of the country enjoyed at least a 4% gain, the Northeast’s free-form sales climbed just 1%, to 37% of lens sales here. Perhaps it’s a natural balancing of last year’s surge, when the region enjoyed double-digit growth.

PALs: Maybe New Englanders don’t like lines. The Northeast enjoys the highest percentage of PAL sales nation-wide (74%) and the lowest percentage of bifocal and multifocal sales (22%). The PAL category has grown in this region by four points over last year’s numbers, and by nine points in the last five years.

MATERIALS AND EXTRAS: Polycarbonate is the most-sold material here, and it even saw a large jump in percentage points, hitting 61% this year (versus 48% last year). Trivex sales saw a slight decrease, to 10%. And though it led the nation last year in percentage of AR sold (84% of all treatments sold), AR sales in the Northeast took a slight dip—but enough of one that it now comes in at a very close last place (80%).

FRAME MATERIALS: A LOOK AT THE LATEST IN FRAME SALES AND TRENDS IN THE NORTHEAST

ON THE EDGE: NORTHEAST REGION

DO I EDGE IN-HOUSE?

# OF JOBS EDGED IN-HOUSE (COMPARED TO LAST YEAR)

+ MORE: 14%

- LESS: 14%

= SAME: 27%

INTENT TO START IN-HOUSE LAB SERVICES WITHIN 3 YEARS

EDGING
8%

SURFACING/CASTING
6%