Tiffany & Co. (TIF) slashed its full-year earnings forecast, underscoring the worst: Even upscale consumers have been hit by the economic downturn and this year’s holiday season is likely to be the weakest since the early 1990s.

The basic question of when consumer confidence will be restored can be answered with a stock reply for the immediate future: Who knows, but not soon.

The New York-based upscale jeweler says it expects full year earnings to be $2.30 to $2.50 a share on a flat sales, or a decline of 2%. Previously, the company looked for sales growth of 9% and earnings of $2.82 to $2.92 a share.

Like other companies, Tiffany plans to cut staff and trim costs in response to the downturn. It also will reduce the number of new store openings next year. It operated 204 stores on October 31.

In the third quarter, Tiffany’s profit fell to $43.8 million, or 35 cents a share, from $101.5 million, or 73 cents, for the same period a year ago. Analysts expected the company to earn 24 cents a share.

Tiffany’s said worldwide sales fell 1% and stores open at least one year declined 7%.

Investors looking at retail stocks might want to consider Wal-Mart (WMT). The nation’s largest retailer has cut prices on groceries, consumer electronics and selected items to pull in wary shoppers.

It seems odd to assume that Tiffany’s would be recession-proof. It deals in discretionary goods – things that can easily be cut in an economic crunch with little pain. Still, the company’s fortunes are a good barometer of upscale consumer sentiment.

So, anyone planning breakfast at Tiffany’s might want to brown bag it.