NEW YORK - The souring job market and rising costs of the usual teenage indulgences — a slice of pizza, a drive to the mall, the hottest new jeans — are causing teens to do something they rarely do: be thrifty.
It's a far cry from the freewheeling spending of recent years, when teens splurged on $100 Coach wristlet handbags, $60 Juicy Couture T-shirts and $80 skinny jeans from Abercrombie & Fitch.
Now jobs for teens are less plentiful, and parents who supply the allowances are feeling the economic pinch themselves.
The stalwart retailers of teen apparel, such as Abercrombie and American Eagle Outfitters Inc., are reporting sluggish sales, defying the myth that teen spending is recession-proof: It holds up longer, but can eventually fold.
It's even becoming cool to be frugal.
Last week, Ellegirl.com, the teen offshoot of Elle magazine, launched a new video fixture called Self-Made Girl, which shows teens how to make clothes and accessories. The first video offers tips on how to create a prom clutch.
"It's a little tacky in the economic unrest to tote a big logo bag," said Holly Siegel, the site's senior editor. She said it's no longer about teens "one-upping each other," but rather where they can get it cheap.
Victoria Bradley, a 16-year-old from Springfield, Mo., says the $80 she earns each month from baby-sitting is being eaten up by more expensive school lunches, late-night snacks with friends and stylish clothes.
Now, she says, she and her friends head for the thrift store or just browse at the mall.
"I used to be able to buy a T-shirt and jeans every couple of months," Victoria said, adding some of her friends are even "making their own clothes or altering their old ones to fit or look better."
Victoria's mother, Michelle Bradley, said she and her husband cut back spending on themselves last year, and early this year also started paring back "frivolous" buying for their three girls.
"We have made a conscious effort to not use credit cards," said Bradley, who stopped paying for Victoria's text messages last month. The top priority is school supplies and choir fees.
The job market for teens isn't what it used to be, either: Nathan Reeser, a Cincinnati 15-year-old, lost his job making pizza four months ago and has had to cut back on spending. He's shopping more at Target and less at Abercrombie & Fitch's Hollister stores.
"Now, I just get money from my parents, but they don't have as much because of taxes and everything else," he said.
Teen hiring has slumped by 5 percent since March 2007, with many mom-and-pop stores, which typically hire younger workers, laying off employees. Hiring in the overall job market fell by just 0.1 percent during the same period.
That's still not as bad as the 13 percent drop in teen hiring in the early 1990s. That means that if the larger job market mirrors the last teen hiring slump, "we're not out of the woods," said Michael P. Niemira, chief economist at the International Council of Shopping Centers.
Economists say this teen spending slump could be the worst in 17 years, when teen frugality led to the demise of once-hot Merry-Go-Round Enterprises Inc. and ushered in an era of flannel shirts and torn jeans.
Last month, teen retailers suffered an 8 percent drop in sales at established stores. The good news is that the under-20 crew is still spending on tech gadgets like iPods, cell phones and headsets, analysts say.
What makes this slump different, says Deloitte Research chief economist Carl Steidtmann, is the soaring cost of basics such food and gas, which have a direct impact on younger consumers.
Gas could reach $4 a gallon this summer, and prices for teen favorites like pizza and potato chips have all climbed, squeezing the amount of cash teens can spend elsewhere.
Sales at teen retailers open at least a year averaged a 0.5 percent decline last year, compared to a 3.3 percent increase in 2006 and a 12.1 percent gain in 2005, according to a UBS-International Council of Shopping Centers tally.
Retailers like American Eagle and Tween Brands Inc., which operates Limited Too, have cut their earnings outlooks amid deeper-than-expected sales declines. Abercrombie & Fitch reported a disappointing 10 percent sales drop in March, while Pacific Sunwear of California Inc. announced earlier this year it was shuttering its urban-inspired Demo stores.
Among the few bright spots is Aeropostale Inc., whose jeans are about 30 percent cheaper than Abercrombie & Fitch. Candace Corlett, principal at consulting firm WSL Strategic Retail, said low-price chains like H&M and Steve & Barry's should do well.
And Urban Outfitters Inc., which operates its namesake stores and the Anthropologie brand, has held up well. Trend experts believe that's because it has a thrift-store feel.
Secondhand clothing chains have seen business surge this year as teens and their parents buy popular brands like Gap, Banana Republic and Juicy Couture at a fraction of the regular price.
Kerstin Block, president and co-founder of Buffalo Exchange, a Tucson, Ariz.-based chain that sells second-hand clothing, said Gap jeans there run $9 to $20. A new pair runs $50 to $60. Block noted that buying second-hand is also appealing to a growing eco-friendly sentiment among teenagers.
"It is way cooler to get a super deal on that shirt rather than being able to spend the most money on something," said Anna D'Agrosa, director of Consumer Insights at The Zandl Group, a market research company focusing on teens. "Kids are becoming really aware of what is happening to their economy and to their families."
URL: http://www.msnbc.msn.com/id/24187291/
WASHINGTON - The odds the country will fall into its first recession since 2001 are rising sharply.
Thirty percent of economists now believe the economy will shrink in the first half of this year, up from 10 percent who thought this in January, according to a survey being released Monday by the National Association for Business Economics, known by its acronym NABE.
“That’s a striking difference,” said Ken Simonson, chief economist for the Associated General Contractors of America and the NABE’s point person on the survey. The tone of the overall survey, he said, was “extremely gloomy.”
Under one rough rule, if the economy contracts for six straight months it would be considered in a recession. Many economist and the public believe we are in one. Even Federal Reserve Chairman Ben Bernanke recently acknowledged, for the first time, that a recession is possible.
Forecasters “were notably downbeat about their own companies and the overall economy,” Simonson said.
The majority of forecasters polled — 51 percent — thought the economic growth during the first half of this year would clock in between zero and 1 percent, which would still mark a feeble showing. Sixteen percent pegged growth in the first half at between 1 and 2 percent, while only three percent put it at between 2 and 3 percent. No forecaster believed growth during this period would exceed 3 percent.
The economy nearly stalled in the last three months of 2007, growing at a pace of just 0.6 percent. Many analysts say the economy’s normal growth rate should be just over 3 percent. The government will report on the economy first-quarter performance at the end of this month, while the second-quarter’s results won’t be known until late July.
A trio of crises — housing, credit and financial — have hit the country, crimping spending by people and businesses alike. And, that’s weakening national economy activity.
Against that backdrop, 70 percent of the economists said they are more pessimistic about the economy’s outlook than just three months ago.
And, 45 percent said they expect a substantial slowdown in housing in the next six months. The housing slump — which has dragged down home values and led to record-high home foreclosures — is the biggest weight on the economy.
Thirty-nine percent said harder-to-get credit has negatively affected their businesses, up from 26 percent in January.
The one-two punch of weakening economic conditions and soaring prices for energy and other commodities is squeezing companies’ profits margins, the survey says.
Fighting to limit damage to the economy, the Federal Reserve has slashed interest rates and taken a number of extraordinary steps to help financial institutions overcome credit problems, which had threatened to paralyze the entire financial system.
Interestingly, 69 percent said the Fed’s action had no impact on their businesses.
The survey, based on the responses of 109 NABE members, was conducted between March 24 and April 8.
URL: http://www.msnbc.msn.com/id/24228456/
