According to a Deloitte survey released on Wednesday, back-to-school (BTS) spending, the second-largest spending event for families after the holiday season, is anticipated to decline for the first time in nine years. The survey's findings indicate that consumers are struggling amid the two-year inflation storm, raising concerns about the success of "Bidenomics."
Deloitte found that elevated inflation has crushed household budgets:
"Although parents were willing to endure higher prices last year for replenishing BTS items after the pandemic, 18 months of inflation have changed their tune. Uneasiness about the economic situation is creating price sensitivity and causing parents to reassess how they'll approach shopping for the upcoming school year."
Parents across three income groups are expected to reduce BTS spending by 10% year-over-year, with average spending per child sliding to $597. The overall BTS market will likely contract for the first time in nine years to $31.2 billion, compared with $34.4 billion in 2022.
"As persistent inflation weighs on parents, many are having to make strategic decisions when it comes to their BTS budgets this year," the report said.
Parents are concentrating on spending on school supplies (+20%) while reducing spending on apparel (–14%) and tech (–13%).
About 51% of BTS shoppers anticipate a weakening economy in the next six months versus 54% in 2022. If Bidenomics was such a success, why all the gloom across all income classes?
"This back-to-school season is all about economizing. Consumers are looking to save by shopping early, searching out deals, prioritizing spend to essential school supplies ... they're on the hunt for those bargains," Stephen Rogers, executive director at Deloitte's Consumer Industry Center, said.
Considering BTS is the second biggest spending event for households, the first decline in spending in nine years does not bode well for the economy as inflation crushes households. Just wait until September rolls around and student debt payments restart.