Teen Spending Power

Here is an interesting economic development story that economic developers have not been paying much attention to.

In five years, spending by American teenagers has jumped from $122 billion a year to $170 billion, sending retailers scrambling to find ways to siphon more of the lucrative pool.

Meanwhile, teens’ spending habits are the center of new efforts by nonprofit groups attempting to curb what they see as increasing materialism and bad spending habits among Americans in general. The Center for a New American Dream recently teamed with the World Wildlife Federation on a Web-based campaign for teens called "I Buy Different." The two groups hope to use the site to capitalize on youthful concern for the environment and convince teens to seek out more recycled and organic products.

Another nonprofit group, Jump$tart Coalition for Personal Financial Literacy, works to encourage the development of curriculum materials for schools to help teach money management skills to the young. The group was formed in 1995 by financial experts concerned that the average student leaves high school with little to no sense of how to manage financial affairs.

Of the $170 billion in overall teen spending in 2002, $125 million was teenagers’ own money, with the rest coming from parents. Teens get their income from a variety of sources, according to Michael Wood, vice president of Teenage Research Unlimited.

This says several things to me: 1) the role of young people in the economy is growing; 2) teens will have more say about the shape of future markets to come; 3) we need to think more about the types of jobs held by teens; and 4) as the baby boomer's spending power declines, we are going to need more help from the all segments of the population, including teenagers.

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