Starbucks is shutting 250 stores across the country, a bad sign for the economy and a warning that ordinary people have run out of spare cash.

• Coffee is the first thing people cut when money gets tight, so Starbucks closures point to a weak consumer.
• Shoppers are trading down — from Target to Walmart, then from Walmart to dollar stores.
• Even dollar store bosses say customers are spending less and coming in less often.
• Starbucks expanded aggressively for years, putting a store on nearly every corner, and now has too many.
• The stock market has not caught up to this yet, and can stay disconnected from reality for a long time.

Outlook: More closures are likely as consumer spending keeps shrinking, with other retailers expected to follow.