There's good news for the U.S. toy business. Consumer spending on toys, dolls and games will reach $73.3 billion by 2011, according to statisticians at Easy Analytic Software, New York. That represents a 42 percent increase in overall sales from the estimated $51.6 billion consumers spent on playthings in 2006, a figure compiled by the U.S. Dept. of Commerce from administrative sources, including sales tax receipts.

While today's households face a challenging and changing world, the U.S. economy is chugging along at a pace considered healthy by most. The stock market is soaring and the unemployment rate is at what is generally considered "full employment." On the negative side, the Iraq war and the wider "war on terror" has no end in sight, and the housing market, while still at historic highs, is slowing. Furthermore, gas prices, now down slightly, are expected to fluctuate towards generally higher levels.

That being said, U.S. demographics point to healthy growth in retail sales of toys, dolls and games. First and foremost, post-World War II baby boomers keep on buying, buying, buying and their children or grandchildren—Generation Y—are matching their appetite for spending. Together, these two groups will continue to drive the economy, though change is around the corner for the boomers. Over the next five years, this group will begin to enter a new phase of life as the oldest of them begin turning 65 and start to retire in greater and greater numbers. Meanwhile, Gen Y is growing up, and by 2011, all 76 million will be college-age or older.

This all boils down to good news for the toy market: Gen Y will be the prime group having children by 2011, and boomers will be the doting grandparents with disposable income to spend.

Over the next five years, consumers increasingly will be doing their toy shopping in the West, the fastest-growing region in the U.S. for sales of toys, dolls and games. Sales in the western states totaled an estimated $11.5 billion in 2006 and are projected to increase 45 percent to $16.8 billion by 2011. Eleven of the West's 13 states are predicted to grow faster than the national average of 42 percent, with Nevada and Arizona leading the pack. Of the 169 largest metropolitan areas in the West, 60 are expected to have sales increases exceeding the regional average of 45 percent and 93 are projected to register growth exceeding the national average.

The South, the nation's largest region in terms of population and geographical area, accounts for the greatest share of toy, doll and game sales—an estimated 36 percent of total U.S. sales. Sales in southern states are expected to grow 44 percent by 2011 to $26.6 billion. In particular, Florida is predicted to have the fastest sales growth at 49 percent, followed by Georgia and Texas, each with projected increases of 47 percent. More than two-fifths of the 147 major metropolitan areas in the South are expected to grow faster than the nation as a whole.

In the Midwest, total toy, doll and game sales reached an estimated $11.7 billion in 2006, and are projected to increase 39 percent to $16.3 billion in 2011. No state in the Midwest is expected to grow sales as fast as the nation as a whole, although Minnesota will grow the fastest with expected growth of 41 percent, followed by Wisconsin and Indiana, each with expected growth of 40 percent. The region's two largest metropolitan areas (Chicago, Ill.-Naperville, Ind.-Joliet, Wisc. and Detroit-Warren-Livonia, Mich.) are expected to experience sales growth of 41 percent and 37 percent, respectively. The fastest-growing major metropolitan area in the Midwest is Sioux Falls, S.D. The Sioux Falls metro area recorded toy, doll and game sales in 2006 of an estimated $38.4 million, a figure projected to grow 48 percent to $56.9 million by 2011.

Sales in the Northeast totaled $9.9 billion in 2006. By 2011, sales in the Northeast are projected to grow 38 percent to an estimated $13.6 billion, the slowest of any U.S. region. Only nine of the 144 major metropolitan areas in the U.S. predicted to grow faster than the national average are in the Northeast. They are Dover, Del., with predicted growth of 50 percent; Atlantic City, N.J., with growth of 46 percent; Poughkeepsie-Newburgh-Middletown, N.Y., and York-Hanover, Pa., with increases of 45 percent each; Ithaca, N.Y., and Allentown-Bethlehem-Easton, Pa., with 44 percent each; and Reading and State College, Pa., and Vineland-Millville-Bridgeton, N.J., each with expected growth of 43 percent.

New York is the biggest market for toys, dolls and games. The New York metro area, spreading into three states, recorded 2006 sales of $3.2 billion, and is projected to grow 38 percent to $4.5 billion by 2011. New York alone accounted for 6 percent of the nation's entire 2006 toy, game and doll sales. Six of the nation's 934 metro areas (New York, Los Angeles, Chicago, Philadelphia, Dallas and Washington) had sales of $1 billion or more in 2006. Together, these six areas registered retail sales of $10 billion and accounted for 20 percent of all 2006 toy, doll and game retail dollars.

As for growth, New Orleans-Metairie-Kenner, La., is expected to be the fastest-growing major metro market between 2006 and 2011. EASI projects that the area will rebound from catastrophic Hurricane Katrina damage and will grow its toy, doll and game sales 71 percent to $249 million by 2011, from an estimated $145 million in 2006. New Orleans saw its sales in those categories plummet 29 percent from 2005 to 2006.

Other fast-growing major metros include St. George, Utah, with predicted growth of toy, doll and game sales of 65 percent; Las Vegas-Paradise, Nev., with growth of 63 percent; and Greely, Colo., and Naples-Marco Island, Fla., each with expected growth of 60 percent.

Some of the hottest markets for toys, dolls and games are small metros, currently with core populations between 10,000 and 50,000. Their populations are growing, and so is their sales potential. The fastest growing is Palm Coast, Fla., with projected sales growth of 81 percent by 2011 to $24.8 million. Located on the Atlantic coast halfway between Jacksonville and Daytona Beach, Fla., Palm Coast's population grew 53 percent between 2000 and 2006, and is projected to grow another 33 percent by 2011.

EASI expects households between the ages of 25 and 34—prime ages for buying toys—and the number of children between the ages of birth to 11 to grow faster in Palm Coast than in any other U.S. metropolitan area. Households between the ages of 25 and 34 are predicted to grow 40 percent over the next five years, with the number of kids between 0 and 5 years growing 30 percent and the number of children between 6 and 11 growing 24 percent.

Other small markets that are on the rise include Lake Havasu City-Kingman, Ariz.; Heber, Utah; Pahrump, Nev.; The Villages, Fla.; and East Stroudsburg, Pa. Each market is predicted to grow its sales of toys, dolls and games by 55 percent or more by 2011.