NEW YORK - AMERICANS have slammed their wallets shut since the financial meltdown, and the future is looking downright scary for stores across the country and the whole US economy.

On Wednesday, Best Buy slashed its earnings forecast and said the changes in consumer behaviour have been nothing less than 'seismic', creating 'the most difficult climate' the company had seen in its 42-year history.

And Macy's, which turned a profit in the third quarter of last year, swung to a loss this time, warned that the upcoming holiday season would be 'a nail-biter' and slashed its budget for 2009 capital expenditures by almost half.

Shoppers from the well-heeled to the low-income have cut back as they worry about shrivelling retirement funds and job security.

The changes could tilt the economy into a deeper, more painful recession.

'We're definitely spending less. The first thing to go was the housekeeper and clothes spending,' said Ms Melanie Coyne of Missouri, who is dining out less, using more coupons and taking her lunch to work. She's also 'wearing what I have'.

The downbeat forecasts from retailers on Wednesday came two days after Circuit City Stores filed for bankruptcy protection. It's also laying off thousands of workers and closing 20 per cent of its stores.

Analysts believe consumers - who usually account for about 70 per cent of economic activity - will no longer be the key driver of the economy, said Mr Scott Hoyt, senior director of consumer economics at Moody's Economy.com.

'This is the end of the consumer-based economy,' said Mr Peter Schiff, who runs the investment firm Euro Pacific Capital in Connecticut.

'Americans have been buying too much stuff, and now the epic shopping spree is over. It is a permanent change.'

For years, consumers tapped into inflated home equity and use credit cards to finance their spending. Now those spigots are being shut off, and job losses are mounting.

Even when home prices recover and credit becomes more available, Mr Hoyt notes, Americans will have learned something: 'They can't count on asset appreciation to meet their long-term goals.'

If consumer spending can't lead the economy out of its deepening funk, what can? Even receding gas prices in recent weeks haven't provided a boost to shoppers dealing with multiple economic worries.

'When you've got bills and you're only getting one income, it's hard,' said Ms Christine Ferguson, 63, a retired former day-care employee in Baltimore who rents an apartment and lives on her Social Security check.

'With everything going up, every time you look at something it's going up, and your paycheck is not, you can't do it.'

The recent data has been startling: For the third quarter, consumer spending fell 3.1 per cent, the worst performance in 28 years. Sales at established stores for October were the worst since at least 1969.

The slump is continuing into November: Macy's says it expects a decline of at least 10 per cent this month.

Even those with appetites for Prada and Gucci aren't immune.

Among the hardest hit are luxury stores. Saks and Nordstrom reported same-store sales fell at least 10 per cent. At Neiman Marcus Group, the drop was nearly 27 per cent.

Some stores make as much as 40 per cent of their yearly profits during the holiday season, and the outlook for this year's is growing even darker.

For toy merchants, that figure is up to 50 per cent. That could mean more bankruptcies in the new year.

Stores have been cutting prices far earlier than usual to try to draw shoppers in and save the season. Many have pushed up sales typically reserved for the day after Thanksgiving.

This year, many holiday shoppers will be waiting until the last minute not because they're procrastinators or looking to outsmart the stores, but because they simply don't have the money to spend.

'We always bought something,' said Ms Cindy Schneirson of Phoenix, who hasn't bought new clothes in more than a year. I used to get my hair done, nails done. I don't do any of that now.'

The sharp cut in Best Buy's outlook shook Wall Street analysts, who thought it was well-placed to benefit from Circuit City's woes.

'As bad as things are, it was a shock to the retailing world as well as to the consumer spending outlook,' said Mr Ken Perkins, president of research company RetailMetrics.

'Best Buy has always been the holiday destination. That announcement scared me.' -- AP