The financial markets, home sales and the mortgage business have all taken some hard hits lately, enough for Treasury Secretary Henry Paulson to offer the reassurance that the U.S. economy is strong enough to weather the blows without falling into recession.
But what really drives the U.S. economy is consumer spending, and for a bellwether indication of consumers’ mood analysts are anxiously watching back-to-school sales. Parents may scrimp on much else but not on their kids. The biggest spenders are college students and their parents, according to the National Retail Federation, an average of $957 per student, up less than 1 percent from last year, for a total of $47.3 billion on shoes, clothes, electronics, dorm furnishings and even textbooks.
The federation expects school-age spending will be a little stronger, $527 per student, up almost 7 percent from last year, for a national total of $18.4 billion.
But in July teen retailers reported sales were flat or slightly down. Teens and pre-teens are a notoriously fickle market, and most back-to-school purchases are made in August and another sizable percentage in September.
Judging the market is complicated by the growing custom of states and cities offering sales-tax holidays and the trend toward schools opening earlier, although two big states, Texas and Florida, further complicated matters by moving their school openings back.
But back-to-school is the first big sales event in the seasonal retail marathon culminating in the Thanksgiving-to-Christmas Super Bowl of consumer spending. There’s a lot more riding on those little backpacks than just books and pencils.