How bad is the economy these days? So bad that one of the nation’s largest purveyors of custom-made addictive drugs is slashing its forecast yet again as customers tighten their belts.
In the salad days, of course, many Starbucks (SBUX) fans argued that $5 Mocha Frappucinos and $3 Talls were no longer “consumer discretionary” items (stuff we choose to buy when we’re feeling flush) but “consumer staples” (stuff we have to buy in thick or thin). Alas, now that the economy is tanking and gas prices have soared, many consumers are wisely choosing to pump the $4 into their fuel tanks instead of their stomachs.
On the back of a recent stock-market rally, we hear lots of chatter that the Fed’s emergency injection of cash into the crashing financial system has saved the day–paving the way for a second-half recovery. Don’t bet on it. Wall Street may have staved off a Bear Stearns-like fate, but Main Street, which accounts for 70% of spending, is just starting to feel the pain.
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