Wednesday, October 7, 2020
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Teen spending plummets to a record low
The resilience of the U.S. consumer has been a consistent theme in the Morning Brief over the last several weeks.
But the country’s youngest consumers are hunkering down during the pandemic.
And their outlays have never been so low.
Analysts at Piper Sandler on Tuesday released their latest semi-annual survey of U.S. teens, which found that teen spending fell to a record low during the fall. As of the firm’s fall survey, annual teen spending averaged just $2,150, down 5% from the spring, 9% from last year, and eclipses the previous survey low recorded in the fall of 2011.
Piper’s survey was conducted between August 19 and September 22 covering 9,800 responses from teens in 48 states with an average age of 15.8.
Certainly, the COVID-19 pandemic and the forced closure of many establishments like malls, movie theaters, and restaurants where teens spend much of their money is the primary factor driving spending to record lows.
Some 48% of respondents said the economy is getting worse, the most since 52% said the same in the fall of 2011. And altered routines and job opportunities are also holding these consumers back.
Piper’s survey found that 76% of teens are either attending school either remotely or via a hybrid in-person/remote format.
Additionally, 33% of teens have a part-time job, down from 37% last fall with 23% of teens saying the pandemic has impacted their ability to find work. According to the September jobs report published last Friday, the unemployment rate for those 16-19 years old stood at 15.9%; in September 2019, it was 12.5%.
But as we covered in Piper’s fall 2019 survey, teen spending had declined to an eight-year low and has generally been trending lower over the last six years.
And many of the same trends continue to weigh on the space a year later.
Casualization continues to be a formative trend, with spending on cosmetics falling another 20% to $84/year as of the fall 2020 survey and down from $173/year three years ago.
Athletic footwear and apparel also continue to gain share among teen consumers — 80% of girls prefer athletic footwear, a new record high, while 88% of boys prefer athletic footwear, 3% above the 2018-19 average.
Meanwhile, spending on handbags continues to crater, falling to just $87/year from $197/year back in 2006.
And while a pandemic is not built into anyone’s business plan, brands are getting hit hard by the retreat of a younger consumer they’ve spent a decade selling on the idea that experiences are more important than things.
What to watch today
7:00 a.m. ET: MBA Mortgage Applications, week ended October 12 (-4.8% during prior week)
2:00 p.m. ET: FOMC Meeting Minutes, September meeting
3:00 p.m. ET: Consumer Credit, August ($14.000 billion expected, 12.250 billion in July)
6:45 a.m. ET: RPM International (RPM) is expected to report adjusted earnings of $1.20 per share on revenue of $1.49 billion
8:30 a.m. ET: Lamb Weston Holdings (LW) is expected to report adjusted earnings of 31 cents per share on revenue of $867.33 million
Stocks mixed as US stimulus hopes endure despite Trump ending talks [Yahoo Finance UK]
Powell warns of 'weak recovery' if policymakers provide 'too little' COVID-19 relief [Yahoo Finance]
YAHOO FINANCE HIGHLIGHTS