The Not-So-Affluent Society

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The first casualty of the current economic slowdown may be the American bourgeoisie.

From Williamsburg to the Mall of America, these are the middle-class, educated Americans who have been spending $4 on a cup of coffee and $200 on a pair of jeans. Not for them is the conspicuous indulgence of a foreign sports car, but that high-end chef's stove can be seen as a necessity. Foods like sushi, once exotic and urban, are so mainstream that even the Sopranos became sushi snobs. Examined in books like Bobos in Paradise (2000) and Trading Up: The New American Luxury (2003), these consumers are now sounding a retreat. U.S. shoppers are paring their spending amid lower home prices, high energy costs, and tightening credit.

Coach, known for its handbags, has become the latest maker of American luxury goods to sound a warning that Americans are no longer spending on "affordable luxuries." And Starbucks has begun experimenting with a cheaper and smaller cup of coffee, according to The Wall Street Journal.

"You had a lot of people who graduated to a level of consumption they could not really afford," Adrianne Shapira, a retail analyst with Goldman Sachs told the New York Times. "Two-hundred-dollar pairs of denim were plausible when home values soared, but now $100 jeans are looking more reasonable."

Coach said today that sales at its stores in North America open at least a year fell 1.1 percent in the holiday-season fourth quarter, compared with a gain of 20.8 percent in the quarter a year earlier.

"My own view is that we're already in a consumer recession," Lew Frankfort, Coach's chief executive officer, told Reuters.

Like Tiffany & Co., which also reported a decline in U.S. sales, Coach was buoyed by overseas gains. Overall, Coach sales rose 21 percent and the company reported an 11 percent increase in fourth-quarter earnings.

Certainly an affordable luxury can still be found for a few dollars a day at Starbucks? But the seemingly omnipresent coffee chain is also seeing traffic at its U.S. stores fall. In response, Starbucks is experimenting with a short (eight-ounce) cup of coffee selling for $1 in its Seattle-area stores.

It is also trying out free refills for brewed coffee. Sarah Gilbert on BloggingStocks hails the move as "a new entry point for the cash-poor masses." Brewed coffee, she notes, often gets thrown away if it's not fresh. "Free refills could end up not increasing the company's costs at all, and do great things for customer goodwill," she says.

But doesn't that sound like something a diner would do? And if it is all about the price, then why not pay a few cents more for a bigger cup at Dunkin Donuts or McDonald's?

Starbucks has always been more about the experience than the price: the dormlike couches, the Nick Drake CD playing in the background, and the interaction with the baristas. If that changes, then the bobo truly is an endangered species.

Can it get any worse for affluent Americans? Yes, if they eat sushi. The New York Times is reporting that laboratory tests of tuna sushi taken from 20 Manhattan stores and restaurants found mercury levels so high at most of them that they would exceed what the Environmental Protection Agency considers acceptable.