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Tightening the Belt


Consumers have lost their confidence.

The RBC Cash Index showed that consumer confidence dropped to 29.5 in April, the worst reading since 2002. Last April, that number-compiled using surveys from Ipsos-was 85.4. So what does that mean? Unsurprisingly, soaring energy prices, record high home foreclosures, and an increase in job losses have Americans more unnerved about the economy than they have in a long, long time. While no one knows for sure the best way to respond to growing uncertainty, Americans from all walks of life are tightening the belt on spending. Even the super wealthy.

Sympathy is hard to spare when it comes to the rich, but there's more to the story than just fewer Coach (COH) bags and Burberry (BRBY-L) scarves flying off shelves. American households in the top 20 percent by income (making more than $150,000) contribute 40 percent of consumer spending, which makes up two thirds of the US economy. Money that the super rich spend eventually makes it way down to the clerks, managers, and delivery folks. And a lot of that money ends up in places like The Gap (GPS), or Wal-Mart (WMT). In short, it doesn't matter much who's spending less. A slowdown in consumer confidence and spending is everybody's business.

For more on the modern day plight of the rich, we turn to Hoofy and Boo.

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