After being schooled in the hard realities of a recession, families with children expect to spend an average of almost 8 percent less than last year on clothing and supplies for the new school year, according to a retail trade group.

Cutbacks won't stop with pencils and hoodies either, according to Washington, D.C.-based National Retail Federation. More than 11 percent of families expect their children will take part in fewer extracurricular activities or sports and almost 6 percent are thinking twice about private vs. public schools.

"The economy has clearly changed the spending habits of American families, which will likely create a difficult back-to-school season for retailers," said Tracy Mullin, president and CEO of the trade group in a prepared statement.

The predictions don't bode well for retailers who see the back-to-school shopping season as an early indicator on the holiday season that follows.

Specifically, families with students in grades kindergarten through 12 expect to spend $548.72 on school merchandise compared with $594.24 last year, according to responses from more than 8,000 consumers surveyed in late June and early July by BIGresearch in Columbus, Ohio.

Meanwhile, families with college-bound students are expected to spend about 3 percent more on supplies and clothes than last year. But because fewer people are planning to attend college this fall, total spending should drop 4 percent.

Of those who do make it there, nearly three out of five college students, or 58.5 percent, are expected to live at home this year, the research found. By comparison, 54.1 percent did so last year, and 49.1 percent did so in 2007.