Retailers are preparing for a slower than normal start to the school year and this could be just the beginning.
"I got a shirt, some socks," said Johelin Rubio, a kid going back to school.
And two pair of jeans went for about $60 at Old Navy. Wednesday is Johelin's Sosa's first day back to school in Vallejo, but her mom, who works three jobs, had to limit her daughter.
"It's a lot of money that we don't have but we need to find a way to get it," said Yajaira Rubio, Johelin's mother.
A national poll shows 71 percent of consumers plan to spend less on back-to-school shopping this year. Seventy-nine percent say they'll buy back-to-school items on sale or with coupons.
Johelin's mom spent only half of what she spent last year.
"We have to watch what we do, what we buy, what we eat, everything," said Yajaira Rubio.
The number two discount retailer, Target, posted a nearly eight percent drop in quarterly income. Target says volatile back-to-school sales are making it uncertain it can meet estimates for the third quarter.
Some retail experts say stores actually need to raise prices, otherwise everything from cotton to shipping to labor will eat away already low profit margins. Still, raising prices could chase customers away. The Regresado Family is already reusing notebooks, pencils, crayons, and other supplies.
"They're going to be brown bagging it because it does tend to be cheaper than buying hot lunch over there," said Elin Regresado, a parent.
The International Council of Shopping Centers says back-to-school purchases, from July through September, the second biggest retail season after Christmas, may only climb one percent this year. That would be the slowest growth in seven years.
"It's really the overture to the Christmas shopping season, and if attitudes remain uncertain about the economy you're going to have a lot of anxiety among merchants come Christmas," said Professor Harley Shaiken, a UC Berkeley Economist.
UC Berkeley economist, Harley Shaiken says a holiday downturn would be felt well into next year.
