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There are lots of "once burned, twice shy" people out there. Yes, they've recovered much of their wealth due to the stock market's rebound -- but not only is that wealth "on paper," but, as has been pointed out elsewhere on this thread, stocks have been artificially inflated by the Fed.

Fear of coming inflation, rational or not, plays into the saving over spending mentality. Baby boomers and even younger generations are focused on high tuition costs for their offspring (and are treated to daily horror stories about student indebtedness), and on spiraling medical costs, a big consideration for those who are getting into their 50s and 60s.

A high priority for many, given their fear of a relapse in the overall economy, and/or their fear of rising taxes at the federal, state, and local levels, is to become debt-free -- with the possible exception of a mortgage on their primary home, and even there, some are aggressively paying down their mortgages, and/or refinancing to shorter-term (10 or 15 year) fixed-rate mortgages.

With that sole exception (and mostly because mortgage payments are still treated -- for now, at least -- favorably by taxation policy), the goal for many is to get out of all debt, despite the fact that financing rates on big-ticket items such as cars, home improvements, and appliances are at a near-record low rate. Whether this reflects an overly cautious attitude, or a prudent one, the fact is that many people are absolutely refusing to use their credit. No margin account with their broker; no new car unless or until they can pay cash; and obviously, no credit card balances being carried. And so, spending gets cut across the board -- dining out; vacations; clothing; home furnishings.

At the lower end of the socio-economic scale, such economies are not matters of choice, but necessity. What seems to have changed (if you buy the premise of the column -- and I largely do) is that those who can spend are increasingly opting not to.

Higher still in the socio-economic spectrum, sales of super-yachts and private jets are growing. But I see a great deal of caution in the upper-middle class, and even among those who are economically comfortable, but a notch short of great wealth.

But I see a great deal of caution in the upper-middle class, and even among those who are economically comfortable, but a notch short of great wealth.

Exactly. That's the customer base for our stores, and they are spending much more carefully than they did even two years ago.

Since it became apparent - around last June - that Obama was likely to be reelected, discretionary retail spending has fallen sharply. Most of the retail sales "up" figures you hear in the MSM are about price increases for gasoline and food.