The number of companies on Bermuda's register has declined, investment income has tanked compared to when the stock market was soaring, there are fewer jobs and the Island has run a trade deficit for the past two quarters. In February, the Ministry of Finance said in its annual economic review that Bermuda's gross domestic product declined an estimated 0.2 percent 2001 and predicted that GDP would decline another 1.5 percent this year.

But anecdotal evidence suggests that consumers, who account for more than half of the country's economic output, have not categorically cut their spending in response to the economy's woes.

Normally during a recession, consumers rein in discretionary spending. But the most recent retail sales index figures show sales grew 0.7 percent between May 2001 and May of this year, after inflation.

As the owner of Pulp & Circumstance, Kristi Grayston has witnessed a decline in tourist purchases, but said this week that residents do not seem to be spending any less.

She said Pulp & Circumstance has not seen a year-over-year decline in sales until this month, when locals travel and her customer base shifts to tourists.

"I suspect that because tourists are spending less than they used to," and `they are not as many'."

Normally, between 80 and 90 percent of her customers are locals, and during the first six months of the year she did not notice - and her figures did not reflect - any change in spending habits.

"I haven't seen customers who wouldn't normally look at a price tag start looking at them," she said.

Ms Grayston's experience does not appear to be an anomaly. Other retailers, including Astwood Dickinson and Hornburg Calypso said they had not seen any decline in sales to locals.

Hornburg Calypso's general manger, Pierre Dutoya, said the company's new store, the super-expensive Max Mara boutique on Front Street, had surpassed sales expectations by 30 percent.

And according to Carl Paiva, the president of C-Travel, residents are travelling in the same numbers as they normally do around Cup Match. The number of bookings made this month for leisure and corporate travel are also consistent with figures from previous years.

Mr. Paiva does not find the consistency surprising.

"We don't have a lot of choice," he said. "You have to fly to get off the Island."

And the trips residents take don't appear to be more modest.

A spokeswoman for Franklin Travel said the agency's customers still visit to all of the places they used to go and don't seem to be spending any less on their trips.

Mr. Paiva said: "I don't think the Bermudian market focuses on the stock market as much as you would find in North America".

Aside from a lapse in travel spending immediately after September 11th, "we don't notice trends in Bermuda like you do in the US".

Although the American economy grew during the first quarter, economists expect consumers to rein in spending following the corporate scandals which have sent stock prices into a tail spin.

Low interest rates have helped stifle the decline. A Bank of Butterfield spokesman said the bank had seen recent growth in retail lending, even though economic data suggests people might not be as able to pay the loans back.

Some of those loans are being used to pay for cars. Richard Davidge, the owner of Eurocar, which sells Renaults, said sales of $38,000 cabriolet convertibles were higher this year than last.

Since January, he has sold 25 of the cars, the same quantity as he sold during all of last year. He expects sales for the year to number close to 40.

And people are not shorting on the extras. Mr. Davidge sells just two models of the cabriolet - one with leather seats, another without. His experience suggests that Bermudians will want all of the other extras.

He said that between 70 and 75 percent of his customers take out consumer loans to buy their cars.

The remainder pay for them themselves or receive a car allowance from their companies.

He said only one customer had been denied a loan this year.

Anthony Steed, the chairman of Bermuda Motors Ltd. and chairman of the Bermuda Automobile Dealership Association, said people were adding more accessories to their cars more than last year and the year before.

Whereas some might have settled for the alloy wheels and a CD player now, they now add spoilers and change the music system.

But he thinks that sales won't continue to be as strong.

"I think at some point our industry is going to be affected to the extent that people are not going to have the resources to do things," said Anthony Steed.

Though closely tied to America's economic well-being, the local economy responds responds between six and nine months behind schedule of its American counterpart.

Some businesses have suffered because of the decline.

Darren Lewis, a part-time worker at A&P Marine, said this year his company is selling fewer boats than last summer, although he would not give figures. He said that last year, the dealer sold many more 21-foot Wellcrafts, their biggest seller, than this year. The boat sells for $58,000, although it is currently on sale for $54,500.

"We do get a lot of enquiries," Mr. Lewis explained. "It is just them coming back. We've had a lot of bites at the bait but people are not taking it."

"People are not as ready to write the cheque or dash to the bank to look for loans."

But the number of enquiries about second-hand boats suggests that people are not completely averse to spending large sums, and willing to pay say, $20,000 on a used boat instead of three times as much on a new one.

Mr. Lewis also said spending on maintenance products has been stable relative to last summer.

On Monday, Adam Cooper looks at how different segments of the economy are faring.