Business and entrepreneurship
The business of back-to-school
ASU economist explains how inflation, tariffs and AI are reshaping one of the nation’s biggest retail seasons
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Story highlights
- Jose Jurado, senior research economist at ASU’s W. P. Carey School of Business, explains why back-to-school shopping matters to the U.S. economy.
- This year’s shopping season is unfolding against a backdrop of persistent inflation, tariffs and tight household budgets. At the same time, technology is reshaping how families make purchasing decisions.
- So far, the season suggests that households still have the capacity to spend on necessities but have less confidence and flexibility when it comes to discretionary purchases.
Back-to-school shopping is more than a seasonal ritual for families. It is one of the country’s largest annual retail events, generating billions of dollars in spending
For retailers, it is a critical sales period. For economists, it offers an early snapshot of how Americans are responding to rising prices, shifting consumer confidence and broader economic uncertainty
This year’s shopping season is unfolding against a backdrop of persistent inflation, tariffs and tight household budgets. Retailers have launched promotions earlier than ever, expanded discount offerings and adjusted their supply chains to navigate trade policy uncertainty while competing for cost-conscious shoppers
At the same time, technology is reshaping how families make purchasing decisions. AI-powered recommendations, online price comparisons and major sales events such as Prime Day are changing not only where consumers shop but also when they buy and how retailers plan for demand
To better understand the economic forces driving this year’s back-to-school season, ASU News spoke with Jose Jurado, senior research economist at Arizona State University’s W. P. Carey School of Business. He explains why the season matters to the U.S. economy, how businesses prepare months in advance and what today’s shopping patterns reveal about the health of consumers and the retail industry
Note:The following interview has been edited for length and clarity
Question: Back-to-school shopping is often viewed as a family tradition, but from an economic standpoint, why is it such a significant event for the U.S. economy?
Answer:Back-to-school shopping matters because it concentrates a large amount of household spending into a short period and spreads that demand across apparel, footwear, school supplies, electronics and dorm-related goods. The season accounted for an estimated $128.2 billion in U.S. retail sales in 2025
It is also economically important because many of the purchases are unavoidable. Families may postpone vacations, restaurant meals or discretionary spending, but children still need clothing and classroom essentials. That makes the season a useful test of how consumers reallocate constrained budgets
Q: Consumers are still navigating higher prices, tariffs and economic uncertainty in 2026. How are those factors influencing what families buy and how retailers are pricing and promoting school essentials?
A:The composition of spending is shifting toward basics and visible value. Reuters reported that inflation reached 4.2% in May and that many lower- and middle-income consumers were avoiding big-ticket purchases while retailers emphasized groceries, household necessities and school items. Retailers are responding with sharper price points and clearer savings messages: Dollar General advertised more than 70 classroom essentials for $1 or less, Target offered supplies starting below $1 and thousands of items under $20, and Kohl’s highlighted large assortments below $25.
Tariffs and trade uncertainty affect both the sticker prices and the promotional calendar. Retailers have moved imports and sales earlier to reduce exposure to possible tariff increases, while families are encouraged to shop during early deal events or state sales-tax holidays
Q: What does this year’s back-to-school shopping season tell us about consumer confidence and the overall health of the economy?
A: Back-to-school spending intentions reveal more caution than the aggregate sales data. Deloitte found that planned spending on back-to-school supplies was down roughly 6% in real terms. This, along with the fact that this spending is closer to necessities than luxury purchases, points to reduced consumer confidence. In addition, 57% of surveyed consumers expected the economy to worsen over the next six months, the highest share since 2020. The labor market is also sending mixed signals: The economy added 57,000 jobs in June, below expectations, although the unemployment rate edged down to 4.2%. Taken together, the season suggests that households still have the capacity to spend on necessities but have less confidence and flexibility when it comes to discretionary purchases.
Q: Technology is changing how people shop. How does that reshape the back-to-school retail landscape, and what does it mean for traditional brick-and-mortar stores?
A:Technology is making back-to-school shopping more searchable, easier to compare and increasingly promotion-driven. During the first day of Prime Day, U.S. online spending across retailers reached $8.3 billion, up 5.3% from a year earlier. The four-day event generated about $26.4 billion, up 9.3%. Because competing retailers run overlapping promotions, a single platform event now influences the timing and pricing of the broader market, including school-related purchases
Brick-and-mortar stores are not necessarily being displaced, but their role is changing. Physical retailers can counter online events with synchronized promotions, immediate product availability and store-based convenience. During Prime Day counter-sales, Best Buy traffic reportedly increased 18.1% and Target traffic 16.3%, showing how compelling deals can turn online price awareness into in-store visits
Q: Looking beyond this school year, what long-term trends do you expect to shape back-to-school spending in the coming years, and what should consumers and businesses be watching as the retail landscape continues to evolve?
A:First, back-to-school is likely to become a longer and more event-driven season. Prime Day moved earlier in 2026, retailers launched competing sales in June and some analysts noted that the shift could pull school spending forward. Businesses should monitor not only how much consumers spend, but also when they spend it during the traditional July-August shopping period
Second, value-seeking appears to be a long-term shift rather than a temporary one. Some evidence suggests that roughly 4 in 10 consumers now display deal-driven, cost-conscious behavior, and nearly 7 in 10 retail executives view value-seeking as a lasting change. More than 7 in 10 surveyed Prime Day shoppers said an item needed to be discounted by at least 30% to qualify as a good deal. Consumers, however, should evaluate the total cost of their purchases rather than focusing solely on the advertised markdown.
Third, AI-assisted shopping will become more important. AI-originated traffic is already converting at higher rates. Businesses should track conversion by trafficconvenience tools help them find genuine savings
Finally, tariff exposure, import timing and retail concentration will remain important factors to watch. Importing goods earlier may help ensure product availability, but it also increases inventory carrying costs, while large retail platforms are increasingly shaping the promotional calendar for the broader industry
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