CNN
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Last year, consumers splurged on back-to-school shopping, spending a record $41.5 billion, according to estimates by the National Retail Federation.

This massive sum, which amounted to more than $890 per household, exceeded the all-time high of 2021 by about 12 percent. Higher prices certainly played their part, but so did increased optimism about the strong labor market, as well as easing inflation and the robust U.S. economy.

This year, consumers have become more dovish. Although higher-than-average inflation has all but been wiped out, consumers have retreated as they feel the cumulative impact of price increases and struggle through an economic slowdown that, while expected, is adding to uncertainty.

Still, there is enough basis to project that back-to-school spending in 2024 will be the second highest ever, at $38.8 billion, or $874.68 per household, according to the NRF.

The extent to which this assessment proves true could prove to be a crucial indicator – not only of how people manage their spending, but also of the health of the consumption-driven economy.

“There still seems to be a great willingness to go out and spend money,” Mark Mathews, the NRF’s executive director of research, told CNN.

People have simply become “very, very price conscious,” he added.

Bargain hunting and cheaper deliveries

At any other time of the year, items such as stationery, clothing and electronics would fall under the category of discretionary spending.

And by and large, it is discretionary and high-cost spending that has seen the biggest declines during the spending slowdown.

But returning to school is a whole different matter.

“Back to school is not a discretionary event, it’s a really necessary expense,” Mathews said. “If you’re sending your child to college, you have to buy furniture. You have to buy shoes, because kids keep growing.”

While consumers can’t avoid major expenses entirely, they can limit them: NRF surveys found that about 41% of respondents look for bargains.

“Consumers are definitely looking for deals,” he said. “Retailers are realizing with price-conscious consumers that they really need to be promotional.”

Changing inflation rates are likely to play a role. While the pace of price increases has remained higher than normal, it was the service categories – particularly housing-related services – that exerted upward pressure, according to consumer price index data.

Smoother supply chains and a tendency for consumers to spend more on services and experiences have contributed to disinflation (rising but slower prices) or even deflation (falling prices) in certain categories of goods.

Retail prices are expected to fall 0.7 percent this year, after rising 5.9 percent in 2022 and 0.6 percent last year, according to an analysis released last week by economists at S&P Global Market Intelligence.

Some commonly purchased school supplies are actually cheaper than last year, and some are even below 2019 prices, according to monthly retail data from market research firm Circana.

Post-it notes are down 22% compared to the same period last year, paper is down 20%, and crayons and pencils are down 19% and 13%, respectively. Crayons and post-it notes are down 7% and 12%, respectively, compared to 2019 (while the other categories are up at least 11%), Circana data shows.

According to data from the Bureau of Labor Statistics, average hourly and weekly wages have been above the rate of inflation for well over a year, leading to a continued economic recovery in consumer spending.

Therefore, back-to-school spending should remain roughly at last year’s level, said Duleep Rodrigo, head of KPMG’s U.S. consumer and retail sector, in an interview with CNN.

“What surprised us was the more positive sentiment among consumers regarding fall shopping,” Rodrigo said of the accounting firm’s latest consumer survey.

In many cases, this represents a reversal from the summer survey, in which the outlook appeared much bleaker, he said, attributing the increase to higher expectations of interest rate cuts and discounts.

This could also be a good sign for the important Christmas shopping season, he said.

“They are much more optimistic about spending,” he said.

For some families, spending habits – especially those related to starting school – certainly look very different than in previous years.

In Shoreline, Washington, Amanda Webber and her family have been struggling to overcome financial difficulties for some time.

Most of the family’s savings went towards the cost of treatment for Webber’s brain surgery earlier this year. She is recovering well and expects to return to work soon, but the monthly budget has been severely strained.

The family saved by shopping more at Costco, buying larger quantities from the butcher, preparing meals well in advance, and leaving the air conditioning off to keep the electric bill down.

The expenses for starting school are no exception to the rule.

“I’m a bargain hunter,” Webber says, noting that she’s been searching for coupons online, doing more price comparisons, browsing bargain bins and getting more involved in her neighborhood’s Buy Nothing group.

She and her husband even ripped out pages from the black-and-white marbled notebooks they had on hand to reuse them.

Therefore, the money that was actually spent was quite targeted, Webber said, pointing out that most of it was used to buy her 16-year-old daughter an appropriate outfit for interviews and presentations.

“I think the shoes were the most expensive part of it,” said Webber, 49.

In Gainesville, Florida, 46-year-old Lisa Castruita and her teenage daughter live by a simple mantra: “Do more with less or make do with what you have.”

“People just have to be smart about the things we’re doing and the steps we’re taking,” Castruita told CNN. “People in the older generations have done so much with so little.”

The pandemic and the personal and economic upheaval that followed have been a profound change for Castruita, who lost her husband to Covid in 2021.

“Years ago I had support there and more income and I didn’t think twice about buying ‘new everything,’ new notebooks, only the best,” she said. “When you’re a single parent or you’re on one income, you feel it… all these (price increases) add up. I’m a widow and I just feel like I had no choice but to take a smarter, more prudent approach.”

Since her daughter is now entering 11th grade, Castruita says she does not want to fall into the excesses of previous school start times.

“One thing I’ve noticed is that we’re reinventing the wheel and getting into debt for no reason,” she said. “I would spend money on things and 50% of it would go unused.”

Castruita said that in addition to being resourceful, finding bargains and shopping at thrift stores, her friends and family, whom she affectionately refers to as her “tribe,” have been an invaluable help. They have brought used clothing, a haircut and a book bag for free or at a discounted price, or offered services in exchange.

Castruita estimates her back-to-school expenses this year will be 60 to 70 percent lower than in the past. And by cutting back on unnecessary spending, she can spend money on shared life experiences with her daughter, she said.

“The current economic climate doesn’t allow us to do things the way we used to,” she said. “It’s about changing lifestyles. It’s about making smart, intelligent, informed decisions that improve your life situation.”