They are curbing spending, pinching pennies and feeling nervous about their financial future -- and it's making retailers jumpy.
As real estate sales stagnate and foreclosures increase, consumer confidence is weakening.
Meaning consumers are tightening budgets and spending less on everything, from gas to clothing and food.
While overall August retail sales were 3 percent higher than July sales, they were still down 1 percent from the same period in 2006, according to Retail Forward, a retail consulting firm.
That softness could forecast trouble for retailers this holiday shopping season. And that's making retail giants such as Wal-Mart and Home Depot cringe -- sending ripple effects through the rest of the economy.
As the two largest retailers in the country, what happens to Wal-Mart often trickles down to the rest of the nation's retailers, leaving them and advertisers scrambling to flag customers' interests while downsizing inventory to offset lost income from increased markdowns.
"They [customers] are getting hit with lots of scary news," said Michael Silverstein, a retail analyst with the Boston Consulting Group and the author of Treasure Hunt: Inside the Mind of the New Consumer. "They can open the paper and read about communities with high incidences of subprime mortgages and domino effects on prices.
They can see statistics on the overhand of real estate product in markets like Las Vegas and parts of Florida."
But the slowdown in the retail sector is not necessarily because people have less money. In fact, real median incomes increased this year (for the second consecutive year) to $48,200, according to U.S. Census Bureau research.
So why are shoppers squeamish? Analysts say it's all a state of mind, and consumers are fretting over their future and resisting big investment items, such as homes or cars.
It doesn't help that the little things, like gas, have also become more expensive.
Have you noticed that you're shopping less? You're not alone. Here's a rundown of the symptoms of a shopping slowdown.
Lately, there's been a lot of buzz about the rise of subprime mortgages, and the subsequent fallout, including increased foreclosures and the dropping of real estate prices. It appears to have given home buyers butterflies as a result -- home sales dropped 24 percent in July in a year-to-year comparison, according to the Florida Association of Realtors. Construction of new homes fell 2.6 percent in August.
"The people who are immediately affected by the housing problem are people who have adjustments in their interest rates coming up," said Bart Weitz, director of the Miller Center for Retailing Education at the University of Florida.
"Homes are big expenses, and consumers are being very careful about major commitments," he said.
"When the housing bubble burst, it had a calming effect on people's spending patterns."
"From what I can tell, most real estate firms are cutting back on advertising," said Amy Rankin, spokeswoman for Scott McRae, a Jacksonville advertising agency.
"But companies that maintain their advertising usually come out of the recession in better shape, with higher brand awareness," she said.
Heightened gas prices might seem like an obvious and oft-hyped reason for economic slowdowns, but more money spent on necessary fuel means less discretionary income for other items.
Gas also filters through the economic food chain in other, perhaps unexpected, ways.
If it takes more money to fuel a delivery truck headed to the grocery store, eventually, the grocery bill will reflect the increase.And gas prices -- an expense that hits people all across the board -- is another rally cry that is crimping spending.
"The oscillation of gas prices has hurt consumer confidence," said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida during a recent speech in Jacksonville. "And I don't anticipate that to go away," he said.