Last year at this time, Kathy Johnson and her husband traveled to London and Paris, where she spent about $2,000 on a shiny, red Louis Vuitton shoulder bag and a matching charm without much thought.

This year Johnson, who runs a tech advisory firm with her husband in the San Francisco Bay area, is recycling older dresses to save money.

"I'm thinking 'Maybe I'll just sneak in last year's dress and nobody will notice,' and I'll just accessorize it a bit differently," said Johnson, who expects to attend several holiday parties this year.

"I try to make it a little more about what I need on an everyday basis, rather than spending a bunch of money on something I'll just wear once or twice," she said.

Johnson's logic is likely to be played out across the country this season as US consumers cut spending amid the worst financial crisis since the Great Depression.

That is terrible news to department stores, boutiques and apparel makers, who tend to get a boost when the fashion-conscious splurge on clothes for office holiday parties and New Year's festivities.

US retail chains just posted the worst October sales results in more than three decades, prompting the International Council of Shopping Centers to pare its already grim forecast for holiday season sales. It now expects November-December sales to rise 1 per cent, from a prior view of 1.7 per cent.

What is more, a recent survey by executive search firm Battalia Winston Amrop found that one-fifth of US businesses are not having 2008 holiday parties, effectively passing out pink slips to women's ‘little black dresses’.

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