Tariffs have worried parents starting back-to-school shopping early

USA Today

4 days ago

Back-to-school shoppers are worried about the economy and tariffs and starting their shopping early, according to The National Retail Federation.
Shoppers are also pulling back on some purchases for back to school.
"One of the ways that we know consumers respond to economic stress and uncertainty is that they move up their shopping around key events," whether that is the holidays or the all-important back to school season, said NRF Vice President of Industry and Consumer Insights Katherine Cullen during a media call on Wednesday.
That happened in 2020 during the COVID-19 pandemic, when shoppers were uncertain whether schools would be back to in-person learning. It also happened in June of 2021 with supply chain concerns and again in 2022 with amid worries about inflation.
"The reasons consumers start earlier are pretty consistent,'' Cullen said. "They do this because they want to avoid stress. They want to make sure they get items in time, particularly if they're worried about things being in short stock."
Consumers are under economic stress
Consumer sentiment remains at historical low levels, but consumer finances and net worth remain at near record highs, said Mark Mathews, chief economist and executive director of research at the NRF.
There has been discretionary income growth, and wages continue to outpace inflation while unemployment remains historically low, said Mathews. There has also been reasonable job creation, though that is muted in the last few months and gives a cause for concern about where those numbers are headed, he said.
Debt also remains incredibly high, said Mathews, but "it remains manageable from a servicing standpoint and lower-income households are a lot more challenged with debt, but overall economy wide, we don't see it.
A challenge for consumers is that unlike two to three years ago, households no longer have a significant savings buffer, he said. The bottom 80% of U.S. households have been actively "dis-saving", or spending more than their discretionary income, since 2022, he said.
"Consumers just don't have that buffer anymore to be able to deal with higher prices. So if we see incomes become a bit more challenged in the face of price rises, it's going to be problematic for consumers because they just don't have those savings to fall back on," Mathews said.
Full effect of tariffs is still to come
The full effects of tariffs have not yet hit, said Mathews. There are some price increases in some categories, but not all, he said.
"We know retailers are trying their hardest to keep those back-to-school items in particular as low as possible," he said.
Mathews also said historically, it takes a long time for tariff price hikes to work their way to the consumer.
"One of the reasons for that is a lot of retailers' shelves remain stocked with pre-tariff imports. We know retailers increased imports dramatically at the start of the year," Mathews said.
Additionally, some retailers may be "eating some more of those tariffs than expected," he added. But Mathews said that worries him because as businesses absorb tariff costs instead of passing them on to the consumer, that can lead to wage and job cuts, which then affects the economy.
Back-to-school shopping has already begun
Early-bird back-to-school shopping has already begun and has increased in July. This year, 26% of back-to-school and college shoppers had already started browsing and buying items by early June, according to a study by the NRF with Prosper Insights & Analytics of back-to-school consumer attitudes and expectations. That was up from 22% last year and 17% in 2019. Shoppers often say they like buying early to spread out their budget and to get early deals and promotions.
A big change came in July, Cullen said, when 57% of families shopping for grade-school and college-students said they had begun their shopping. That's up from 55% last year.
A big concern, shoppers say, are tariffs. Three-quarters or 74% of those surveyed said they are shopping earlier this year because they are worried tariffs will cause prices to go up later this season.
"In June, people felt a little bit more worried about their finances and they decided, 'Hey, maybe I'll just buy what I need and then replenish later in the year,' " said Cullen. "That shifted in July when they felt 'No, I need to stock up and save because things might be much more expensive later in the season or later in the year.' "
How much are shoppers expecting to spend on back to school items?
According to the NRF, the average K-12 shopper is budgeting $858 this year on average per student, down from $875, while those buying for a college student this year are expected to spend $1,326, down from $1,365 last year.
And although average spending is expected to be down, total spending is expected to go up as shoppers prioritize essential categories, said Cullen. Overall back-to-school spending is expected to reach $128 billion this year, up 2% from last year, she said.
Still, there are categories shoppers will be pulling back on. The biggest is electronics, Cullen said.
While they may spend on the core school items like laptops, tablets and even a smartphone, Cullen said some shoppers are holding off on accessories that may seem more discretionary like headphones or speakers or maybe even game consoles. They may be looking for hand-me-downs from family members, she said.
Save money: Back-to-school shopping is tax-free in some states with specific dates. See the full 17-state list.
How are back to school shoppers spending differently?
Here's some other highlights from the NRF's call:
Sales Tax Holidays help save money
Shoppers may be able to save some money on their back-to-school shopping if their state has a sales-tax holiday. Seventeen states have designated times in July and August when certain items can be purchased tax-free.
Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at [e-mail] or follow her on X, Facebook or Instagram @blinfisher and @blinfisher.bsky.social on Bluesky. Sign up for our free The Daily Money newsletter, which will include consumer news on Fridays, here.