(Fortune) -- It's not just the Wal-Mart (Charts, Fortune 500) shopper who's feeling pinched.
Worried about the health of the economy, affluent shoppers are increasingly thinking twice before splurging on new handbags or designer clothing, analysts and industry executives say. Their hesitation is sending ripples of concern through the lower rungs of the luxury market once thought impervious to a slowdown.
Nordstrom (Charts, Fortune 500) and Coach (Charts) are among the upscale companies that have warned of weaker-than-expected sales in recent weeks, suggesting that the heady growth of recent years may finally be hitting a wall of consumer anxiety tied to a topsy-turvy stock market and a mortgage crisis that is threatening to engulf the middle class.
Pam Danziger, the founder of Unity Marketing who interviews 1,000 consumers every three months for her luxury tracking study, said that the "mass affluent," or those with household incomes $75,000 to $150,000, curtailed luxury purchases by 20 percent in the most recent quarter. "That's the biggest drop we've seen since we started collecting this data in 2004," Danziger said.
If the slowdown continues, luxury retailers could be hard hit. To appeal to a broader demographic, companies from Tiffany to Valentino have courted mass affluent shoppers with new lines at lower prices. The mass affluent account for 23 percent of households, compared to less than 2 percent for those with incomes upwards of $250,000, according to the U.S. Census Bureau.
These households, with incomes of $75,000 to $150,000, make up 23 percent of the population, and it's "the marginally wealthy who are feeling a bit less well off," said Milton Pedraza, chief executive of the Luxury Institute, a research group that studies behavioral habits of the rich.
Even the rosiest scenarios expect luxury sales, which now total $226 billion worldwide, to slow slightly from the torrid pace of recent years. Bain & Co. predicts nominal sales growth of 7 percent to 9 percent, slightly less than the 9 percent growth of 2006. At the same time, much of that growth is now coming from emerging markets in India and China, not from the United States.
"While it would be inaccurate to say there is a major slowdown, the luxury market has cooled a bit from the peak levels we had seen," said Stephen Sadove, chief executive of Saks (Charts).
Sadove pointed to a strong correlation between luxury shoppers and the stock market, particularly among men. "In early September, when there was turmoil in the markets, we saw slower sales in our men's business, though it has since bounced back," he said.
Coach spooked investors on Tuesday when it said it was seeing fewer than expected shoppers in stores in California, Florida and the Northeast. The company is a bellwether for the mass affluent, having helped create the category when it reinvented itself several years ago as a status brand minus the sticker shock.
After years of double-digit sales growth, Coach investors are beginning to worry about a slowdown. The stock is off 32 percent in the past six months. As of midday, the shares were trading at $36.88, near their 52-week low of $36.15.
Above: chart shows COACH stock price history for the past 6 months
Though still priced well below designer handbags, Coach has quietly gotten more expensive, a fact that may make it "less accessible to a certain demographic challenged by higher fuel costs and lower housing values," wrote Todd Slater of Lazard Capital Markets in a research note yesterday. Slater estimates that the average Coach bag has seen a price increase of 30 percent over the last few years, with $400 handbags now accounting for a quarter of the company's overall sales.
Another retailer that has courted the mass affluent shopper is Nordstrom. The company recently cut its third quarter earnings guidance after September sales came in below plan and inventory piled up on store shelves. Michael Boyd, a spokesman, said women's apparel was among the weaker areas, although sales of designer clothing and handbags remained strong. Nordstrom shares are also trading near their 52-week low of $37.80.
To be sure, not all luxury retailers are feeling the pain. As Danziger noted, the super rich continue to snap up $20,000 Louis Vuitton handbags and $200,000 Cartier watches. And Cartier's parent, Swiss luxury goods firm Compagnie Financiere Richemont, which recently reported a 20 percent sales increase at its specialty watch division, said its biggest concern was not a softening economy, but its ability to keep up with demand.
Above: 2007 Louis Vuitton magazine ad with Scarlett Johanssen & handbag bearing their signature monogram
While there have been signs of softness at the lower end of the luxury spectrum, analysts disagree over how much of it is the result of tighter purse strings versus unusually warm weather, which keep shoppers away from malls.
"I don't see a big change in spending for households with income of $100,000 and above," said Michael Silverstein, a senior vice president with the Boston Consulting Group and co-author of "Trading Up: The New American Luxury," which chronicles how middle class buying habits have shifted to more upscale products.
Silverstein points out that, despite the recent market roller coaster, stocks are still buoyant, unemployment is low and corporate profits are at record levels. All three factors should keep the mass affluent spending, he says.
But other observers warn that those on the cusp of real wealth may not prove quite so resilient.
"To think that this customer is immune to the ups and downs of the economy is simply not correct," said Danziger, of Unity Marketing. "They may not be defaulting on their mortgages, but there's a good chance their homes are not worth as much as they were last year - and as a result they don't feel as rich." 
article above By Suzanne Kapner, images and headline were added for your enjoyment
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