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Teens learning about the economy first-hand

Tuned in to worries of a deepening recession, many teens say that they've been smart shoppers and have lowered their expectations for receiving gifts this holiday season.
/ Source: The Associated Press

Teenagers have never been known for their restraint, but perhaps these times are different. Tuned in to worries of a deepening recession, many teens say that they've been smart shoppers and have lowered their expectations for receiving gifts this holiday season.

"I plan to spend less this year," said Shakara Walker, 18, a senior at Benjamin Banneker High School in Atlanta. "Since I've gotten older, it's got to the point now where gifts aren't everything," she said.

The sluggish economy has prompted members of the Walker family to agree to one major gift and a few smaller items. That's different from last year's long list of gift ideas Shakara and her younger brother picked out of catalogs and magazines to give to her parents.

"If I get a few gifts I would be happy and grateful," she said.

Research by the Buzz Marketing Group, a youth market research company based in Voorhees, N.J., indicates many teens are coming to the same conclusion as Walker and plan to cut back this year. What's more, they're telling their parents it's OK to do the same.

"They're making cuts or asking parents for less, saying just get me the big-ticket items and not all the ancillary items," said Buzz chief executive Tina Wells.

Younger children aged 7-12, who are less likely to be focused on poor economic news, still have high-priced items on their wish list. This would include favorites such as video game consoles and games like the popular Guitar Hero, Hannah Montana- and Barbie-branded items and laptop computers, Wells said.

These overriding concerns come at a time when many teens are making their first efforts at managing their own money. A high school sophomore in Rock Island, Ill., Mackenzie Heriford, 16, said she has saved a monthly allowance from her parents to spend on Christmas.

Though her family has talked about cutting back because of the economy, McKenzie expects to spend more than $100 on gifts and may spend more than last year. Even so, she said her friends also are talking about how the recession affects them.

"A lot of people have been talking about (money) lately because of how bad it's been getting," she said. "I know my parents have been a lot more conservative with their money."

Teenagers wield considerable economic power. All told, the nation's 26 million teens spend about $80 billion a year, according to Rockville, Md.-based market researcher Packaged Facts. Their parents spend another $110 billion for their clothing, food and entertainment, the company said.

Teens typically get their money from part-time and seasonal jobs, parents and other family members.

Walker, for example, is using savings from a summer job at Six Flags Over Georgia for her holiday shopping. She said other teens she knows talk about economic problems but many aren't sure what to do because it's the first recession they've experienced.

"They do worry about it," she said. "Most people don't save when this kind of stuff comes around they don't know what to do."

Retailers, expecting one of the worst holiday shopping season ever, are working on strategies to get teens back in their stores to spend whatever they have this year.

Plano, Texas-based J.C. Penney, for example, plans to have a complete line of new spring clothing for juniors and young men available on the sales floor by Dec. 26.

The day after Christmas is a strong sales day for teen clothing and the company hopes teens will come in with their gift exchanges or holiday cash and gift cards.

The National Consumers League says the spending clout teenagers carry in a family is significant. However, teen oriented retailers have recently reported falling sales, reflecting recent surveys showing teens are more frugal this year, said Executive Director Sally Greenberg .

Earlier this month American Eagle Outfitters Inc. reported same store sales slid 11 percent in November, Abercrombie & Fitch Co. same-store sales were down 28 percent and Aeropostale Inc. reported same-store sales down 5 percent.

Junior Achievement — a Colorado Springs, Colo.-based organization that focuses on educating students about financial literacy — says its most recent survey of 500 teenagers shows 57 percent said they would spend the same or less for Christmas this year, while 41 percent plan on spending more.

Jack Kosakowski, president of Junior Achievement USA, said the results may reflect the need for more education about the economy and spending.

Kosakowski said the current economic situation shows how many adults lack enough information to fully understand finances.

He strikes a cautionary note about what's in store for today's teens: "When you look at the subprime loans small business people took out or college educated people took when they refinanced their homes, it shows clearly that our financial education system has failed these kids who are now adults."