SO THIS is what we've come to:

Shoppers are even buying toilet paper differently. "When they get to the end of the month, and they're out of paycheck, they may buy a smaller-count pack," Mr. Falk said. "You're seeing that shift in consumer behavior during a pay-period cycle more than we maybe have in the past."

That's part of a story on changing consumer habits linked to by Yves Smith. It continues:

Though low-income consumers have been cutting back for the past several months, now upper-income shoppers -- those with household incomes of $100,000 or more -- also are making significant changes, according to a new survey by IRI.

The report, titled "Shopper in Crisis," found that 41% of upper-income consumers reduced spending on nonessential groceries, and a fourth of these consumers said they gave up favorite brands over six months in 2008.

Here's a question—have 41% of upper-income households seen a meaningful decline in their income? Almost certainly not. It is possible that many of them have watched their wealth decline, and they may be diverting some consumption toward spending to make-up for an expected shortfall in post-retirement income, but others are just buying less.

This is a part of any economic downturn—what economists like to describe as an economy-wide increase in the demand for cash. It's perfectly rational. My finances are in good shape, and haven't much changed during the course of the year, yet my spending has declined in recent months as my concern over the state of the economy has grown. Why? Given that everyone else is cutting back, normal or expanded spending on my part alone won't save the economy. And given that everyone else is cutting back, increased cash hoarding as insurance against job loss makes sense.

Only, it doesn't make sense that everyone else is cutting back. Yes, many people have lost their jobs. Some others have found themselves with enormous debt burdens they're struggling to meet. But many households, maybe even most households, aren't facing seriously different circumstances than they were six months ago. And yet their behaviour is changing, and those behavioural changes will themselves generate reductions in spending, investment, and ultimately employment. Good labour will find itself idled because folks like me are nervous, and for no other reason.

This state of affairs is why it's reasonable to pursue monetary, and occasionally fiscal, stimulus policies. It's also one of the most fascinating aspects of economics, as far as I'm concerned. There is a national mood that ebbs and flows, rises and falls and manifests itself in the mood rings of economic datapoints (not to mention the ballot box). Birds flock, wolves pack, and people buy generic.