The Economic Ripple Effect Gone Awry

(CBS)  Meet Chris Yeager. He's an event planner in Los Angeles, putting on fancy bashes for movie studios and corporations.

He says: "They are not celebrities but you want to treat them like celebrities."

But since the economy has cooled off, so have the parties - and the budgets.

That's forced Yeager to cut down on spendy items like flowers … and to cut out some of his staff, CBS News correspondent Ben Tracy reports.

"I am hiring less people and I'm also thinking smarter how I can do it with less people," he said.

Joanne O'Brien used to work many of Yeager's events, overseeing party logistics.

"I'm on the phone trying to get work," she said now. "I had to completely blow through my savings. I have no savings."

O'Brien cancelled her gym membership, skips the movies on Friday nights, and walks to save on gas. She also stopped showing up at the salon where she used to get her eyebrows waxed every two weeks.

"It's painful, because if you've blown through your savings, where do you turn?" O'Brien said.

Megan Gibbons is a brow technician. She's seeing fewer customers - and less tip money.

"I am making coffee at home instead of buying it when I get to work," she said. "I bring my lunch. I try to bring my lunch everyday."

Economists call this chain of events a ripple effect and it happens because spending in our economy is all linked together. Lately, high prices at the pump and grocery store are throwing the economic chain for a loop.

"That inflation eats away at our income makes us a lot poorer, because the incomes we have can't go as far and we can't buy as much," said UCLA economist Ed Leamer. "The last thing we want is a snowball of consumers to cut back significantly on spending because that is recipe for recession."

O'Brien has reinvented herself - starting a pet-sitting business to bring in cash.

And Yeager is doing more with less.

"How happy will you be when the economy starts to chug again?" Tracy asked.

"I can't wait to get back into happier times when people begin to entertain and don't feel self-confident about opening their wallets," Yeager said.

That's a ripple effect that would be much easier to swallow.