Wal-Mart (WMT) has already scaled back 2008 plans twice. It is now cutting back further and it's not just Wal-Mart. Many big are retailers shelving plans to add area stores:

Target Corp. (TGT), Home Depot Inc. (HD), Wal-Mart Stores Inc. and other big-box retailers — buffeted by sagging sales and the housing slump — are pulling the plug on new-store plans in and around Chicago. The pullback is another sign of the darkening outlook for 2008, as retailers turn cautious on expansion.

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"The economy is in the crapper. Housing is going down the chute," says Richard Kopczick, mayor of Morris, which had expected to gain more than $1 million in sales taxes from a planned shopping center that's lost its key big-box anchors. "Lowe's (LOW) backed off, and then Kohl's (KSS) said they wouldn't come without Lowe's, and the whole house of cards collapsed."

Wal-Mart Stores Inc. had plans to add stores in six Chicago-area suburbs. All have either been cut entirely or put on hold. Minneapolis-based Target is walking away from plans for new stores in Morris as well as Antioch, Arlington Heights and at 76th Street and Ashland Avenue in Chicago. Wal-Mart, of Bentonville, Ark., had stores planned for North Aurora, St. Charles, Crystal Lake, Elgin, East Dundee and Bradley; all have been either axed or put on hold.

And after Christmas, Atlanta-based Home Depot will shut down a chunk of the real estate department at its regional office in Arlington Heights and has told brokers it's not interested in new store plans. Home Depot has canceled projects in Minooka and at Interstate 57 and 119th Street in Chicago. Target and Wal-Mart did not return calls. Home Depot would confirm only that it's laid off some Arlington Heights personnel.

This article appears to be about commercial real estate in Chicago. It's not. This same scene is going to play out in scores of cities across the nation. Richard Kopczick, mayor of Morris, called this a "house of cards". Indeed it is, but it is also one of the best examples to date of the domino theory in actual practice.

I have talked about the domino theory many times, most recently in Credit Card Defaults move to Forefront of Deflation Debate.

This is the commercial real estate domino effect. If one key player backs out of a commercial real estate development, then they all do: "Lowe's backed off, and then Kohl's said it wouldn't come without Lowe's, and the whole house of cards collapsed."

On the surface, this merely kills an individual mall (in other words a localized domino effect). But when the scene is repeated scores of times in various municipalities across the country, the cumulative effect cannot be ignored.

This is the final nail in the coffin for jobs prospects in 2008. Store expansion has been one of the key drivers for job creation. Look for unemployment to soar. Look for rising unemployment to trigger still more delinquencies in credit card debt and housing foreclosures. One by one, collapsing dominoes are picking up speed, and from multiple directions as well.