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ShoppingFernando Morales/The Globe and Mail

As students across Canada bid good-bye to summer and file back into the classroom, their backpacks are more likely to be filled with cheaper, discounted and store-brand materials than in previous years.

"This back-to-school buying season will not go in the record books," said a Bank of Nova Scotia report released Tuesday. "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."

Canadian families' purchasing power has been damaged by a drop in the value of both homes and investments, as well as the loss of roughly 390,000 jobs since last October. The soft job market, combined with a lack of seasonal work this past summer, will particularly curb spending among post-secondary school students this back-to-school season, the Scotiabank report says.





Although Canada's economy is slowly mending, parents and students are still likely to be cautious about their spending and look to "economize" on their purchases. "Family members are likely to do more comparative shopping, and take advantage of advertised price reductions, coupons, targeted specials, and typically, lower-cost store brands," the report says.

Education-related spending has remained a "bright spot" in recent years, even as the recession has hurt overall consumer spending. According to Statistic Canada's National Income and Expenditure Accounts data, the value of personal spending on "education & cultural services" remained at a record 1.5 per cent share of overall consumption in the second quarter of this year - over 50 per cent higher than in the beginning of the 1990s, when Canadians first started to allocate more of their money towards education.

"The gap may well narrow, but education-related expenditures should retain their comparatively stronger growth performance in the future," the Scotiabank report forecast, noting that spending on education "takes on added importance during these even more challenging times when the unfolding recovery may well be uncharacteristically slow."

So what exactly do Canadians dish out their hard-earned money on when it comes to back-to-school purchases? Tuition is by far the largest expense, the report says, with the average household spending just under three-quarters of its education dollars on fee-based schools. Four-fifths of that represents the costs of attending post-secondary institutions such as university or college.

Outside of tuition, apparel and footwear, as well as traditional school supplies like writing and math instruments, paper and binder materials are high on most students' list, although these purchases will likely be lukewarm this year.

Buying books will also likely lag spending levels reached in previous years, as students tap into cheaper options such as exchanges, used materials, and the Internet. Discretionary purchases of education-related courses and services could be another casualty of this year's significant squeeze on income.

Still, technology is one area where spending could exceed expectations, fuelled by a general decline in prices, the report says. "Electronic and computer-related equipment, including communication products, have become an important, and in some cases, fully integrated part of the learning experience for all ages."

Cost-conscious parents spent an average of $1,017 getting their children ready for school in 2007, according to the most recent data from Statistics Canada.

Region-wise, Ontario, British Columbia, and Alberta topped spending with an average of $1,200, while households in Quebec and Newfoundland & Labrador averaged the least at around $600. The Scotiabank report attributes the difference to relatively low post-secondary tuition fees in the last two provinces.



Roma Luciw is a writer and web editor of the Globeinvestor.com personal finance site. Please send any comments and story ideas to rluciw@globeandmail.ca.

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