Working poor more pinched as rich cut back

In Chicago, Montopoli Custom Clothiers, a tailor to consumers willing to spend $3,000 to $30,000 for a custom-made suit, has also seen business suffer. Sales dropped 10 percent in October and November from the year-ago period, according to president Jeff Landis. He noted that 20 percent of his clients, who include commodity traders and CEOs of Fortune 500 companies, delayed buying suits for fall.

"I consider them a leading economic indicator," said Landis. He's taken more aggressive measures like increasing calls to clients to get them in the store, but hasn't laid off anyone.

"I'm not at the point of panic," he said.

Overall, the super wealthy — consumers with a net worth of more than $10 million — are still splurging on $1 million boats, $10 million diamond jewelry and other luxuries, according to Milton Pedraza, chief executive of the Luxury Institute, a research institute based in New York.

But this crowd could stop splurging, simply because they're not in the mood. That happened right after the Sept. 11, 2001 terrorist attacks, though luxury spending rebounded soon after.

Jim Taylor, vice chairman of marketing consultancy The Harrison Group, said he's seeing a marked shift in the way people look upon spending.

"There's a real decline in enthusiasm for self-indulgent purchasing," said Taylor.

Orrin Feingold, a New York entrepreneur, decided to get out of his lease on a Volvo XC90 sport utility vehicle because he realized he didn't need to spend $650 a month and another $500 on parking. Feingold, 39, a former chief financial officer of a health care company, said the uncertain financial climate is making him think twice about spending.

"I want to be more practical," he said.

Luxury stores, which have a big presence in New York, are closely monitoring Wall Street. The financial industry accounts for about 20 percent of wages in New York City, according to the state comptroller's office.

Alan Johnson, managing director of Johnson Associates, a leading executive compensation consultancy, expects bonuses to fall as much as 30 percent this year. But more importantly, massive layoffs on Wall Street could cause the affluent to pull back even more.

Meanwhile, Warren, the California limo driver is focusing on day-to-day survival. Faced with a monthly rent of $1,300, he has no choice but look for a full-time job.

He's had training as a machinist before, but now things are too unsettled.

"There is so much uncertainty in the economy from what I see, so I am not sure where I am going to look," he said.

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