Why Halloween spending has spooked retailers.

For most Americans growing up as Gen Xers or Boomers, Halloween was just a minor thrill in the slog between the start of school and the arrival of Christmas. Kids created costumes from cut-up cereal boxes and ran around their streets in a sugar-fueled mania. Holiday décor consisted of a jack-o’-lantern on the front steps and a paper cutout on the front door.

But as the Great Home Equity Cashout hit its stride, our preferred flavor of spooky turned commercial. We had the money to blow and we believed marketers who told us we needed inflatable lawn mummies. Last year, we spent $5.77 billion, compared with $2.5 billion in 1995. Much was made of this continued increase, since the holiday came on the heels of an economic catastrophe. And last year was a turning point—because this year we’ve spent 15 percent less. So the big X factor for retailers is what Halloween will look like in the future, as the crucial millennials have slashed their expenditure. 

Historically, Halloween has been a lagging indicator of our mood. In 2002, we were fresh off the tech bust and 9/11 but still spent $6.9 billion on the holiday, an all-time high. (That figure took a nosedive the following year.) This year’s stats suggest the recession is changing our consumption patterns, and that the downturn has had a disproportionate impact on wealthier households. According to National Retail Federation (NRF) data, 88 percent of survey respondents said they are spending less on Halloween because of it. American Express (AXP) research underscores this. According to that firm’s monthly spending poll, a higher percentage of affluent respondents said they plan to spend less on costumes and décor this year, and will recycle costumes.

That’s not going to stop stores from trying, though. With shopping-center and mall vacancy rates at 18- and nine-year highs, retailers will be taking advantage of the abysmal commercial real estate market to hawk orange-and-black ephemera to the masses. Pop-up stores are growing in popularity, with landlords desperate enough to welcome even short-term tenants.

Even among adults, the craze for dressing up hasn't been abandoned entirely. When it comes to the one-third of NRF respondents (two-thirds of the 18- to 24-year-old group) who plan to dress up this year, the stats show that grown-ups haven’t returned the holiday to the kiddies. The fifth-most popular costume on the NRF’s survey was a character collectively dubbed “wench/tart/vixen.” This probably isn’t what mom is wearing if she’s chaperoning the afterschool candy grab. Likewise, the ill-advised “illegal alien” costume isn’t family-friendly attire.

What people will be donning this year is a blend of the traditional and current pop culture motifs. Witches are still the most widely worn costumes for adults, but the craze for Twilight and True Blood has vampires nipping at their heels. Anecdotal reports indicate that the King of Pop will enjoy a posthumous revival. Sales of Jackson masks, single white gloves, and Thriller-era red jackets are on the rise. Politicians have been popular picks in past years, but revelers seem to want to put the real world out of their minds for a night. Politicians and nurses—number five last year—fell out of the top 10.