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Home › Articles › Essays › The Back-to-School Economic Theory

The Back-to-School Economic Theory

By Tim Herrera

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Slowly but surely, the economy appears to be bouncing back. The stock market is sluggishly inching upward. And with more CEOs and other corporate executives going to jail on fraud charges, there are more high-level and high-paying job openings on the market these days.

Things are starting to look up.

Some financial experts insist the market has "bottomed out" and credit the recent economic improvement with rising consumer confidence. Others say assuring words from Federal Reserve Chairman Alan Greenspan – the guy who probably invented paper currency in America – are keeping the economy afloat.

Personally, I have my own theories about why we're seeing some silver linings behind the dark clouds. It is simple. It is back-to-school time! It is the time of the year when parents pump bazillions of dollars into local stores for three-ring binders, loose-leaf paper and Crayola crayons.

I truly believe that because families are forking over hard-earned cash for Nike basketball shoes, Abercrombie & Fitch apparel and Pentel Gel Roller Pens that the U.S. economic picture is improving.

"Dad, can I get these Jordans? They're only $135!"

"I cannot believe it's only $80 for this matching Limited 2 blouse and skirt! Let's get two!"

"Mom, if we buy $75 worth of Structure clothes, we get $25 off our next $75 purchase! How can we pass this up?"

You can listen to the so-called "experts" if you want to – those people with doctoral degrees in business or economists for snooty worldwide banks. But think about the "back-to-school" theory developed by this father of four children/consumers. Not only does this hypothesis make sense – in a twisted way – but also it is easier to understand. And there are no confusing graphs or charts accompanying this presentation.

A survey by American Express showed that parents and teenagers combined to spend an average of $527 per kid on clothing and other back-to-school stuff last year. That was down slightly from the year before when the average "pull up those pants because no one wants to see your boxers" spending spree was around $548 per student.

Now, even though the numbers dropped slightly over that one-year period, that is still a ton of money. That is a lot of Hello Kitty clothing with matching accessories. That is a lot of baggy blue jeans. That is what is helping our struggling economy right now. I am certain.

If you are skeptical of my theory, do your own evaluation. Try finding a decent parking space at Target or Wal-Mart during August and September. Check out the checkout lines at Mervyns or Macy's. And good luck finding the right Igloo lunch box. It is "Back To School" everywhere you look.

Here's another one of my economic theories. Kids have a lot of money these days. One survey states that because of allowances, after-school jobs, gifts and parents handing over cash every time kids ask, America's 12- to 19-year-old group spends about $153 billion a year. That comes out to an average of nearly $100 a teen per week.

So if we really want to jumpstart the economy, maybe we should encourage our kids to spend more. Hopefully, their increased spending will help generate more jobs at the stores. It will also force kids to hit up their parents for advances on their allowances. This will allow opportunistic parents to begin charging their children interest on loans that will, in turn, put more money in parents' pockets to place back in the economy, as well.

I hope this theory makes sense to you. If not, I'd better get working on my graphs and charts and have the kind folks at the Treasury Department explain it.

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