Morning Business Memo…

Cautious consumers plan to spend nearly 8 percent less this year on back-to-school supplies, according to a new survey from the National Retail Federation. It's clear the economy is still weighing heavily on many consumers' minds. Eight in ten school shoppers say economic conditions will change their spending in some way. "The good news is that consumers are still spending, but they are doing so with cost and practicality in mind," says NRF President and CEO Matthew Shay. "As they continue to grapple with the impact of increased payroll taxes, Americans will look to cut corners where they can, but will still buy what their kids need." The unscientific, opt-in survey suggests many parents will attempt to save by looking earlier for sales, shopping online and by having children re-use items bought in last year's booming back-to-school season. Average back-to-school spending will be $635 per family, compared with $689 last year, says the NRF.

KFC is tossing out the chicken bones and banishing the quaint image of founder Col. Harland Sanders as it gets ready to test a slightly more upmarket restaurant. The fried chicken chain says it's opening a location called "KFC eleven" early next month near its headquarters in Louisville that will serve flatbreads with toppings, rice bowls, salads and only boneless pieces of its Original Recipe chicken. Fast food restaurant chains are attempting to fight back after a drop in sales as many consumers look for healthier alternatives.

Intel put a brave face on the decline of the global PC sales earlier this year, saying it still expected its own sales to grow. Now Intel says its sales will be flat. The world's largest maker of chips for PCs is hoping sales of processors for servers, tablets and smartphones will compensate for the drop-off in PC sales. The downward revision of the company's outlook is an admission that Intel chips haven't made it into many mobile devices. Intel's second-quarter sales dropped 5 percent compared with a year ago.

JP Morgan Chase is in talks with electricity regulators over paying a record fine. The Wall Street Journal says the penalty would "settle allegations that the bank manipulated electricity markets in California and the Midwest." According to people familiar with the talks Chase could pay hundreds of millions of dollars. A $435 million fine was levied this week by federal regulators against the global bank Barclays for alleged manipulation of California markets between 2006 and 2008.

Major banks have turned in big profit gains this season, but the news isn't all good. Much of the earnings increase is coming from cutting costs, rather than growing their core lending businesses. A boom in mortgage refinancing looks like it's about to peter out. And regulators are considering stricter rules that would force the banks to shore up their cash. "It was a very good quarter with headline numbers better than expected," said Anthony Polini, an analyst at Raymond James. But, he added, "the jury is still out" on the second half of the year. Bank of America reported sharply higher second-quarter earnings yesterday, following strong reports from JPMorgan Chase and Wells Fargo last week and Citigroup on Monday.

Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesabc