As consumer comfort in the economy continues to slip, so too have the stocks of companies that depend on buyers' wants rather than their needs. The consumer discretionary sector is limping along, say analysts, who have watched as category after category—from restaurants to hotels, casinos to clothing—gets relegated to the lower rungs on shopping lists.

Unemployment increasing to 5.5% as of May 2008, up from 4.5% in May 2007, didn't help this sector. That increase is one significant factor leading to less disposable income and more angst. "With unemployment rising since January, we're now seeing that affect spending," says Mark Basham, an equity analyst with Standard & Poor's who covers the restaurant sector. "Plus gas, mortgages ...this is taking up more of their income."

It's no surprise that restaurant chains offering value meals—a growing practice in the industry—are faring better, Basham says. Another strategy on the menu that he applauds is spending money on capital improvements. A favorite: Darden Restaurants, which recently upgraded its Olive Garden brand, and plans to focus on Red Lobster this year. "They had lost more of their upscale customers, and by redoing interiors and upgrading menus, they've repositioned the brand," he says.

For the clothing sector, managing in the current environment means some clear belt-tightening. To stay relevant to customers, retailers must keep an eye out for new trends, and also spend money luring exclusive brands into their stores—such as Target's move with fashion designer Isaac Mizrahi. But with mall traffic down across the country, stores also are focused on controlling inventory and not bringing in new items that may not sell quickly enough. Jeff Klinefelter, a senior equity analyst with Piper Jaffray, believes that the apparel industry is in a particularly bad spot because not only are consumers feeling squeezed, but there are few real trends luring them into the stores to buy. While khakis were a boom for the 1990s, and denim more recently, there are few new clothing items currently on the horizon that are long-term must-haves.

However, those brands that are doing well, says Klinefelter, are those that appeal to a more affluent consumer, "and are more aspirational," he says. He points to True Religion Apparel, which prices its jeans at around $200 a pair. Guess is also high on his list, with its strong international growth. "Guess is trending well," he says. Conversely, brands with lower price points, which would seem to benefit from consumers looking for bargains are, in fact, not holding up as well. "Gap, especially with its Old Navy brand, has more competition and less pricing power," he says.

Consumers are also cutting back on vacation spending, with hotels and cruise lines feeling that sting. Big companies with a strong presence in international hubs, however, may have some cushion. "But on the negative side, markets such as Hawaii are really expected to go through tough times," says John Arabia, managing director of Green Street Advisors in Newport Beach, Calif.

With inflation rising and oil prices skyrocketing, there's no sign that consumers are going to feel free and loose with whatever cash they have on hand anytime soon. "Consumers are said to be spending an extra $1,000 in their gas tanks this year," says Arabia. "That's a pretty big hit on discretionary income."