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Worrisome Signs From "Starbucks Barometer"

A Starbucks coffee shop begins to slow down early Tuesday evening just before closing it's doors early, Feb. 26, 2008, in Seattle. Starbucks, the world's largest gourmet coffee retailer, shut its doors for three-hour nationwide training sessions Tuesday evening. (AP Photo/Elaine Thompson)
AP Photo/Elaine Thompson
More and more Starbucks customers are forgoing the small luxury of $4 lattes as the current recession deepens and, reports CBS News correspondent Bianca Solorzano, retail analysts see the drop in expensive coffee sales as a sign of what's ahead.

"When you look at consumers buying at a store like Starbucks," says Marshal Cohen, chief retail analyst at the NPD Group, "that's a great indication of, even the common man who's shopping for luxury has said, 'You know what? We need to stop and think about what we're buying." '

Lower sales of expensive coffee drinks mean lower sales of other luxury items, Solorzano observes.

"We've had a dramatic worsening of the situation in the fourth quarter," says Standard and Poor's Chief Economist David Wyss. "The high-end people have stopped buying, and things have really locked up."

Analysts say upscale companies are usually insulated from recessions, but now, they're seeing sales drop.

Tiffany's finished its year with sales off 24 percent. High-end department store Bergdorf Goodman reported sales down 31 percent. Even high-end electronics makers are facing tough times, amid plunging LCD-TV prices and a strong yen. Sony says it will have its first annual loss in 14 years.

And experts say all of that news combined is bad news

Says Cohen, "We've gotten the luxury consumer who's even said, 'I'm going to throttle back when it comes to spending and consumption, and that puts us into what I call deep recession."