Back-to-School, And Back-to-Spending: Scotia Economics Report

    TORONTO, Sept. 8 /CNW/ - The phrase 'back-to-school' typically elicits
'yeas' to 'nays' from everyone ranging from students of all ages, to parents,
grandparents, as well as caregivers. But for the retailers and service
providers across Canada, 'back-to-school' undoubtedly generates a big 'yea!',
since it is one of the most important shopping seasons on the consumer
calendar, according to a special report entitled Back-to-School, And
Back-to-Spending, released today by Scotia Economics.
    "While a softening economy and job market have prompted many Canadian
households to cut back on more discretionary purchases this year, spending on
school-related goods and services is typically more stable," said Aron Gampel,
Deputy Chief Economist, Scotiabank. "Nonetheless, the retail environment may
well prove more competitive than in recent years as cost-conscious families
look to stretch their purchasing power through more comparative shopping."
    According to the report, this back-to-school buying season will not go in
the record books. Although the recession's grip may be lessening, the
confidence-dampening drag of the sharp and deep contraction in overall
activity over the past year is still working its way through the economy.
    With affordability being enhanced by ultra-low borrowing costs and deeply
discounted prices, households are again beginning to shop and spend. In
response to rising demand, many factories and commodity producers are
restarting their output facilities to replenish depleted stocks, especially in
the beleaguered auto sector.
    "Nevertheless, many Canadians households are likely to remain cautious
spenders until the recovery broadens, improving business confidence triggers a
revival in job hiring, and debt burdens become more manageable," said Mr.

    Spotlight on Education-Related Expenditures

    Education-related expenditures by Canadians in recent years have been a
relative bright spot, both in good times and not so good times. According to
Statistic Canada's National Income and Expenditure Accounts data, the value of
personal expenditures on 'education & cultural services' posted a record 1.5
per cent share of total consumption in the second quarter of 2009 - more than
50 per cent higher than in the beginning of the 1990s when Canadians began to
allocate more of their discretionary spending on education and
education-related products and services.
    "At a time when consumer spending has clearly downshifted over the turn
of the year because of the recession's intensifying impact, Canadians
continued to increase their spending on education," said Mr. Gampel. "The gap
may well narrow, but education-related expenditures should retain their
comparatively stronger growth performance in the future."
    According to the report, demographic forces are at play, with the number
of students attending both public and private schools steadily on the rise. In
the current environment, reduced job opportunities, both temporary and
permanent, may be keeping more students in school, and focussing those
employed to improve their skills.
    "Allocating hard-earned spending dollars on education takes on added
importance during these even more challenging times when the unfolding
recovery may well be uncharacteristically slow," continued Mr. Gampel.
    Tuition is by far the largest education expense annually, with the
average household spending just under three-quarters of their education
dollars on attending fee-based schools, of which over four-fifths represents
the costs of attending post-secondary institutions.

    Household Education Expenditures by Province, 2007
                                                        Average       Under-
                                                    Expenditure     graduate
                 Average   % of Total   % of Total          per Tuition Fees,
             Expenditure    Household    Household    Household    Full Time
    Province         ($) Expenditures    Reporting Reporting($)   (08/09)($)
    Canada         1,017          1.5         34.5        2,948        4,724
     land and
     Labrador        579          1.1         27.5        2,105        2,632
     Island          797          1.4         31.0        2,571        4,530
     Scotia        1,055          1.8         31.9        3,307        5,932
     Brunswick     1,005          1.7         31.1        3,232        5,590
    Quebec           633          1.1         34.9        1,814        2,167
    Ontario        1,220          1.6         32.8        3,720        5,643
    Manitoba         869          1.4         34.9        2,490        3,276
    Saskatchewan     804          1.3         34.1        2,358        5,015
    Alberta        1,176          1.4         37.1        3,170        5,361
     Columbia      1,215          1.7         38.6        3,148        5,040
    (*) Tuition fee represents the weighted average of 'in province' and 'out
        of province' students.
    Source: Statistics Canada, Survey of Household Spending 2007
    (Noteworthy, average expenditures on education in Quebec and in
    Newfoundland & Labrador were around half the national average, largely
    reflecting low post-secondary tuition fees in these two provinces.)

    "No matter which way the regional spending is measured, Ontario, British
Columbia and Alberta in the west, and Nova Scotia and New Brunswick in the
east, tend to be the national leaders in education spending," concluded

    Scotia Economics provides clients with in-depth research into the factors
shaping the outlook for Canada and the global economy, including macroeconomic
developments, currency and capital market trends, commodity and industry
performance, as well as monetary, fiscal and public policy issues.

For further information:

For further information: Aron Gampel, (416) 866-6259,; Adrienne Warren, (416) 866-4315, or Robyn Harper, Public Affairs, (416)

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