The Final Four: Guess which four cities best-weathered the recession’s unemployment storm?

With the lowest increases in unemployment nationally in the last two years in Minneapolis, Buffalo, Rochester and Oklahoma, how did retail in those areas fare? SNEWS asks around to put the latest federal report in industry context.
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There were certainly cities with less unemployment, but in the last two years of recession there were four that had the lowest increases in joblessness: Buffalo and Rochester, N.Y.; Minneapolis, Minn.; and Oklahoma City, Okla. Whoever would have thought these four would ever be named in one breath?

According to the U.S. Department of Labor, of 49 metropolitan areas with populations of 1 million or more, these four had the smallest increases in unemployment between January 2008 and January 2010. Why? It seems none of them relies on the hard-hit heavy manufacturing industries (think automobiles or steel), and all avoided the boom-and-bust extremes that flattened the likes of California, Nevada and Florida.

SNEWS® reached out to several retailers and reps in the fitness and outdoor industries who specifically run stores or work in one or more of these areas. We wanted to find out if they felt as if they’d been on a tropical island in the last two years while the rest of the country was windswept and devastated. Put the umbrella drink down, most indicated. 

"Upstate New York on a regular day, recession or not, is a struggle at higher-end retail,” said Bill Lockwood, a rep with Ferrand Associates who covers the outdoor market in New York, excluding New York City but including Rochester. “But it’s probably more recession proof because it’s a stable economy -- largely a middle-income to lower-income place -- so I don’t think it hits the peaks and valleys other places see. It is a true middle-class and lower-class place, as opposed to other places that were living on high-roller dreams."

New York

Buffalo and Rochester, N.Y., apparently didn’t seem to suffer as much because, well, they already had been. So even though the rate of increase was one of the lowest, they had some of the higher rates going into the recession -- Buffalo rose to 9.2 as of January, the latest month the figures were available, going up only 2.9 during the recession. It still managed to sit below the national rate of 9.7 percent, perhaps helped along by the Canadian deal-seekers coming across the border to shop.

(For comparison, nationally, the jobless rate rose by nearly five points during those two years of recession, to 9.7 percent in January 2010, up from 5 percent. Employers cut 8.4 million jobs, the most in any downturn since the 1930s.)

In Rochester, unemployment went up 3 points, reaching only 8.7, or 1.0 below the national rate, partly because it had diversified recently with its largest employer now being the University of Rochester.

“Rochester and Buffalo are geographically close but very different in their civic landscape, especially in the distribution of wealth and the labeling of blue collar (Buffalo) and white collar (Rochester),” explained Tim Garbach, regional manager for G&G Fitness which runs stores in both areas. “In both instances, though, we were affected in that the middle of the road/lower-end product buyers dwindled immensely. And, in Buffalo's case, the upper-end product buyers declined as well.”

But, the problem is, Garbach said, both towns, as the feds explained, had higher rates going into the official recession so were already suffering, he added.

For Morris Medved, owner of Rochester’s Medved Running & Walking Outfitters, the statistics ring true. He noted that the area economy seemed to have held up well and generally felt “bullish.” 

“We have Fortune 500 companies like Kodak and Bausch & Lomb, and despite some layoffs, they seem to be doing well,” he said. “We’re certainly affected by the slowdown as far as jobs are concerned, and there have been businesses that have folded, but I don’t think we have been impacted as much as some of the other markets. I don’t think we see as many peaks and valleys as other cities.

“We expect to do better than the national economy, and the population here is more optimistic,” he said.

Medved said that his store has fared pretty well the last two years. “We’ve had increases in sales, and we’re doing well this year. March in particular has been very strong,” he said.

Oklahoma

Not only touting one of the lowest increases in unemployment, Oklahoma City also has of the country’s overall lowest rates as of January, hitting only 6.7 percent. It rose a mere 2.9 points. Here, however, a fifth of the city’s workers are employed by the government, a regional economist told the Associated Press. In addition, employees of 29 Native American tribal governments are based in the region, and those workers were slower to shut their wallets since they had federal stimulus money coming in.

But having a little more money doesn’t mean they are all active and spending that money on equipment and gear for exercise or sports.

“Although the labor statistics do indicate a smaller increase in unemployment in our area, we certainly fight other battles,” said Todd Schlepp, partner in two-store Lifestyle Exercise Equipment there. “We are second from the bottom for the least healthy population, and we are also one of the worst states for obesity. 

“So, although people are working, fitness is not as high on the radar as most states,” he explained. “The end result is, I believe we landed in just about the same place as the rest of the country…off.” 

Minneapolis

In Minneapolis, the city with the lowest increase of all in joblessness, the rate only inched up 2.8 points, reaching 7.7 percent.

At Midwest Mountaineering, owner Rod Johnson told SNEWS both sales and profits have been up for his business in both 2008 (double-digit) and 2009 (single-digit).

He said he agrees that his area has fared better than others across the nation. “In my traveling around the Unites States, mostly in resort areas, I noticed business seemed quieter than usual. I got some good lodging deals on Hotwire,” he said.

And, for the future, he said he’s seeing more of the same: Already sales have been strong for the first quarter of 2010.

“What's the old saying: ‘Where there is death, there is life?’” Garbach of G&G Fitness said. “As the big stalwarts in Rochester died, new industry, especially in the technological and biomedical sectors, came to life.”

For Garbach -- and likely for other retailers whether they are in one of these four areas or others -- the work never ends, though:

“We will continue to work at the things that kept us strong through the tough economic times, namely, inventory control, vendor relations, fiscal conservation, marketing research and,” he said, “most importantly, staying connected with our customers.”

If you’d like to analyze how your area fared, you can access the 22-page U.S. Bureau of Labor Statistics report, by clicking here.

--Therese Iknoian with Marcus Woolf

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