The rich are tightening their belts, too. Even if it's still a Gucci.

Faced with the sharpest decline in net worth in nearly 50 years, wealthy Americans are re-evaluating their priorities and slashing their spending at a rate unseen in decades – a move that could have dire consequences for the economy, luxury stores and high-end brands.

In response to the increasingly subdued shopping mood that began late last year, luxury brands are cutting their inventory, changing the assortment of products they offer and tweaking their advertising message.

“Fewer, better things,” suggests diamond jewellery giant De Beers Group in an ad campaign launched last month.

Sure, many of the ultrarich aren't exactly scrimping. Some are still dropping $100,000 (U.S.) on a fur coat or $600 for a pair of shoes – but increasing numbers who were never bargain-hunters are picking through mounds of discounted designer goods to save money in an uncertain time.

And why not? Deep discounts are making it a great time to stock up on high-end clothes and accessories, whether its a Chanel suit, a Prada bag or a $1,000 pair of Christian Louboutin shoes with their bright red soles.

But if conspicuous consumption was a hallmark of the luxury days of old, those still shopping ‘til they drop are taking a more low-key approach, apparently out of deference to the new breed of have-nots.

“I keep a stash of brown paper bags,” says Sara Albrecht, owner of Ultimo, a Chicago-based designer clothing boutique. “No one will ever know.”

Ms. Albrecht said she used to keep just a few bags on hand for those who wanted to keep their purchases hidden from their husbands. But now she has a bigger pile in response to requests from shoppers who want to keep their buying secret from friends and neighbours.

Still, the affluent clients who do come in are buying fewer items and choosing special pieces that are less flamboyant, she said. Ms. Albrecht said her shop has suffered a 20-per-cent drop in sales from a year ago.

Luxury sales overall dropped 34.5 per cent in the first week of December from the same period a year ago, according to SpendingPulse, a data service provided by MasterCard Advisors, and were down 23 per cent in the five weeks ending Dec. 6.

Such behaviour differs dramatically from even just a year ago, when luxury stores couldn't keep up with the wealthy's appetite for extravagance. A-listers wanted $5,000 handbags, not the $500 versions they bought in the past.

But the financial meltdown has deflated the demand that reigned for much of this decade, resulting in plummeting sales for many luxury purveyors. That has forced high-end stores like Saks Fifth Avenue and Neiman Marcus to offer discounts of up to 70 per cent before the traditional start of the holiday shopping season – akin to their downscale competitors.

The aspirational luxury shoppers, those whose average annual salary is about $150,000, began cutting back a year ago, according to Milton Pedraza, chief executive officer of the Luxury Institute, a research firm. That spiralled up the economic scale after the economy worsened.

Single-digit millionaires began pulling back sharply starting in March, when Bear Stearns nearly collapsed and was bought by JPMorgan in a fire sale, Mr. Pedraza said.

And the ultrawealthy with a net worth above $10-million – who make up about 60 per cent of sales and 20 per cent of top luxury stores' customer base – started cutting back in September, when the financial crisis ballooned, Mr. Pedraza said.

“This is no longer a state of mind, or what feels right,” said luxury consultant Robert Burke. “This is a reality of where people's bank accounts and investment portfolios are.”

But he and others are also taking note of a fundamental change in shoppers' psyches, which could linger for a while in what's feared to be a deep and long recession.

The cutbacks by the wealthy are clearly different from the grocery-aisle economizing so many Americans have begun making. For one, the rich typically don't trade down to lower-price brands and stores, luxury experts say. Instead of six pairs of Manolo Blahnik shoes at $700 each, they will buy two – not browse the shoe department at J.C. Penney or shop at Nine West.

It may be hard to sympathize with such tradeoffs given the sudden erosion of jobs in nearly every sector and people's uncertainty about putting food on the table or paying the mortgage.

But millionaires saying no to that third pair of high-priced heels is worrisome for us all, say economists, because it deepens the trough consumer spending has fallen into. Michael P. Niemira, chief economist at the International Council of Shopping Centers, says the economy depends on spending by the wealthy because of their dominance in discretionary purchases, from boats to furs.

But such over-the-top spending isn't prudent any more. Americans' wealth fell 4.7 per cent to $56.5-trillion in the third quarter from the second, the biggest decline since the second quarter of 1962, according to Scott Hoyt, senior director of consumer economics at Moody's Economy.com.

Meanwhile, investment bankers who once could depend on $3-million annual compensation to finance their spending are facing shrinking bonuses, long-term unemployment or worthless company stock, where they may have had most of their net worth.

In the last weekend before Christmas, Faith Hope Consolo, chairman of real estate firm Prudential Douglas Elliman's retail leasing sales division, noted that luxury stores stepped up price cuts even more: On New York's chic Madison Avenue, discounts at luxury boutiques ranged from 70 to 80 per cent off; at Saks Fifth Avenue, discounts were up to 90 per cent.

“They are virtually giving the goods away,” she said.

Offering such deep discounts can cost high-end retailers beyond falling profits, risking the cachet of their brands. That happened to Saks after the Sept. 11 attacks, when deep cuts on designer goods hurt the retailer's tony image.

Retailers may also confront problems trying to raise prices once the economy improves as consumers accustomed to deep discounts balk at buying items at regular prices.

“It is hard for us to tell what the true mindset of the customer is at this point,” said Ginger Reed, a spokeswoman at Neiman Marcus, where profit dropped 85 per cent in the quarter ended Nov. 1. “We do know she is still shopping – both regular-price items and sale items – but not in the quantity she has in the past.”

Heidi Dillon, a 55-year-old philanthropist from Dallas, rarely bought on sale before, but believes that the economic meltdown has permanently altered her spending habits.

“You don't need to buy as much as you did,” she said. “I don't need to buy a bunch of new clothes every year.”

Still, the few purchases that she made this season – a Michael Kors fur, marked down to $6,500 from $13,000 at Neiman Marcus, and a $600 pair of shoes at Barneys New York that had been slashed from $1,200 – cost more than the estimated $6,000 the government says the average household typically spends on food for the year.

And Ms. Dillon is still on the prowl for better bargains. After spotting a $4,800 Jil Sander leather jacket marked 50-per-cent off at her local Neiman Marcus, she e-mailed a salesperson to ask when the next markdown would be. After finding out that the jacket will be discounted further, she promised she would be back.

“At this point, we are not looking for markdowns,” she said. “We are looking for steals.”