Consumer Nation

Teen Unemployment: Will Work for Jeans and T-Shirts

Shares of teen apparel retailers are getting hit particularly hard Thursday in the wake of October same-store sales results.

American Eagle Outfitters and Aeropostale are both down more than 10 percent after missing expectations and other teen retailers, including Hot Topic and Zumiez are not that far behind.

It's not surprising. This sector is facing some tough challenges. Teen unemployment has been at historically high levels. This means teens have less money to spend on jeans and T-shirts.

According to Thomson Reuters, analysts were expecting teen apparel retailers to post a same-store sales decline of 3.2 percent, but sales actually were much worse, declining 5.8 percent last months.

Even as there were signs that other retail sectors might be on the verge of seeing increased levels of consumer demand, the signs were not that encouraging for those who sell to teens.

Friday's labor market report will give a fresh look at the teen unemployment rate. In September it hit 25.9 percent, the highest rate since World War II. What's more, it was up sharply from 23.8 percent in July. That means some 330,000 teen jobs vanished within two months.

Economists are pointing to several factors for this trend: a weak economy, a higher minimum wage, older employees staying in the workforce longer, and the increased school workload for high school and college students.

If history offers any advice on this situation, it's likely that teen unemployment will be with us for a while as it tends to recover much slower than the broader jobs sector.

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