The bad news in Point of Rocks, Md., two months after the worst collapse in the history of the stock market is that people are buying fewer luxury homes from the town's biggest business, North American Housing Corp. The good news is that the company is selling more houses than ever -- less-expensive houses, that is.

"People are figuring out what they can live without. They are finding all the bells and whistles aren't that important," said Carl Benna, president of North American, a modular-home builder. "All of a sudden the basics seem satisfactory."

Throughout the economy, a back-to-basics retrenchment by cautious consumers has begun, accelerated by the October stock market collapse that wiped out $400 billion, or about 2.5 percent, in total household wealth, according to Data Resources Inc., a Lexington, Mass., forecasting firm.

The retrenchment is indicated in new polls by the Washington Post and ABC News measuring attitudes in the Washington area and the nation since the stock market's Black Monday of Oct. 19. {Details, Page A14.}

It also is reflected in a second set of interviews with a group of area residents and business people who have shared their experiences and concerns about the economy following the market's fall.

A survey of consumer outlooks in the Washington area shows that two of every five residents have cut back or postponed personal spending in recent weeks, and another 6 percent say they are "seriously considering" reducing spending or delaying major purchases.

Put another way, nearly half of all local residents -- 46 percent -- have changed their personal spending plans or are considering doing so specifically because of concerns about the economy since the market collapse.

Nationally, one out of three Americans has trimmed spending, according to a Washington Post-ABC News survey completed Thursday.

Where this leads is a critical question for the economic health of the nation in 1988. Without question, the consumer -- the lead engine of the economy during the past five years' expansion -- has slowed down.

"We don't have evidence that consumers think the sky is falling and the economy is on the verge of collapse," said Richard Curtin, director of the University of Michigan's Institute for Social Research consumer sentiment survey. "But they think prospects are somewhat worse and therefore they should curtail their spending."

Thus the consumer holds the key as the new year approaches: A modest, cautious retrenchment could lead the way to slower but sustainable growth next year. A sharper, more pessimistic cutback in consumer spending -- the source of two-thirds of the nation's output -- could help push the economy into a recession next year, putting severe new strains on a very vulnerable national and world economy.

A diminished consumer role leaves open to question whether any other sectors, such as exports or capital spending, will be strong enough to save the economy from a major slowdown next year.

Rising Anxiety At Peacock Buick in Tysons Corner, the No. 1 Buick dealer in five states, the stock market's fall appears to have reinforced skittishness among customers about buying new cars. Last month, Peacock customers bought 62 new Buicks, compared with 96 a year ago. Salesman Bob Evers said some customers, who before Oct. 19 planned to buy new cars, now say they will wait "because financially they don't feel the cushion they had."

General sales manager Dick Bailey, however, blames the 30 percent slowdown from last November on everything but the stock market -- the mid-November snowstorm, the repeal of federal tax incentives and the end of some manufacturers' incentives.

The dealership has cut its advertising budget, and salesmen are using their spare time to call customers and urge them to buy. Bailey hasn't cut his car orders, however, anticipating a surge in 1988.

Mykl and Natalie Barron, proprietors of a Dunkin' Donuts in Lanham, had no money in stocks but are wary of the economy. They have deferred buying a new house or car, but eat breakfast out, go to Redskins games, take in an occasional Kennedy Center show and think about buying a color television for Christmas.

The economizing trend is evident at Benna's modular homes company in Point of Rocks, about 40 miles northwest of Washington. About 10 to 15 percent of his company's revenue used to come from models in the $200,000 and up range, some with family rooms, libraries and 3 1/2 baths. Since the stock market drop, only 5 to 7 percent of his business has come from the top of the line.

And people buying $70,000 to $150,000 homes are foregoing expensive extras such as fancy cabinets, crown molding, ornate windows and upgraded carpeting, Benna said.

This is not necessarily bad news for Benna. He expects an increase in sales next year to 3,000 homes, from 2,700 this year. Buyers are influenced not as much by stock market news as by fluctuations in interest rates, he said.

Because of Black Monday, Benna shelved plans to sell stock in North American Housing in 1988 to raise $15 million for expansion, but he still expects to achieve the growth over time. Meanwhile, the company will cut capital spending by 10 percent next year. "We will repair instead of replace," he said.

Even before Oct. 19, such circumspection had begun. After three years of consumer spending growth averaging 4.6 percent per year, spending is expected to grow by only 1.9 percent this year, according to estimates by The WEFA Group, a Bala Cynwyd, Pa., economics firm. Only part of this slowdown is attributable to the stock market.

"There had been signs even before Black Monday that consumer spending was weakening," said Sandra Shaber, vice president of the Futures Group in Washington, who specializes in consumer behavior. Harrison Hickman, a Democratic pollster, said it has been apparent since the summer that "people have been trying to get their financial houses in order."

Since September, sluggish retail sales also have taken the wind out of the sails of consumer spending, though many analysts are expecting Christmas expenditures to at least match last year's levels. More evidence of a switch in consumer sentiment is that the pileup of consumer debt cooled in October to a 7.4 percent annual rate of growth from almost 13 percent the previous month.

Consumers indicated in the latest consumer confidence survey by the University of Michigan's Institute for Social Research, for example, that they would be less willing to use savings or incur new debt to make major purchases. Only 20 percent of respondents in November said they would take on new debt to make major purchases, compared with a five-year peak of 35 percent at the middle of last year.

The Michigan index of consumer sentiment dropped in November to 83.1 after also declining in October. It was a slight rebound from the point to which the index dropped immediately after Oct. 19 -- 82.4 -- but before Black Monday it stood at 92.5.

Other declines in consumer confidence have been measured by the Conference Board and Cambridge Reports Inc., which conducted a consumer confidence survey before and after the crash.

"We will see a great deal of uncertainty," said Edward Byers, senior analyst with Cambridge Reports Inc. "If there is further economic bad news, they will retrench entirely."

Bright Spots The mood of caution is not universal, however. At Sovran Bank/DC National, sixth largest in Washington, president and chief executive officer Robert P. Pincus says he has yet to see a dent in his bank's 27 percent annual growth rate in loans.

Pincus went out to White Flint Mall to survey consumer behavior on Thanksgiving weekend. Stopping in on bank loan customers who sell young adult clothing, upscale men's wear and jewelry, he said he found retailers relieved that predictions of a plunge in consumer spending had not been borne out.

"I didn't see any red flags going up to show a substantial slowdown of purchasing for Christmas," he said. "I saw {activity} at least equal to last year or a marginal increase."

For Robert Deane, 48, a married father of five from Silver Spring making $80,000 a year, last month brought a change in psychology.

Deane lost $50,000 in the days after Black Monday, in part because of panic buying and selling. Since then, particularly because he says he has grown more pessimistic about the economy's future, he has turned over management of all his accounts to professionals.

But Deane's pessimism has not affected all his economic decisions. While he is standing by plans made immediately after Oct. 19 to defer costly home renovations, he has decided not to trim discretionary spending. He expects to lay out about $2,000 on gifts for Christmas, birthdays and an anniversary. "I came to the realization I am not poor, so why should I act like a poor person?" he said.

"I just decided the heck with it," said Deane, chief economist for the American Health Care Association. "I'll deny the kitchen and the big home improvements, but not these little enjoyments in life."

Since October, he has splurged $400 on accessories for his video camera, $308 for Capitals hockey tickets and $100 for a new cable-compatible remote control for his television.

Millions of other consumers have found no reason to change their spending habits. "We do not go out less often and we don't say, 'We should stay home and save money.' " said Tom Vojir, 41, manager of computer systems for Magnavox Electronics Systems Co. in Leesburg. "We live conservatively anyway."

Vojir -- who with his wife, Hazel, a health insurance claims analyst, has a combined income of $80,000 -- suffered conservative losses on Black Monday: $4,400 on a highly diversified $65,000 investment base. Since October, he has changed his mind about investing in single-issue stocks, will liquidate one of his losing stocks and may buy into another Florida rental property.

The Vojirs plan to spend for Christmas as if Black Monday never happened. Overall, Tom Vojir said he does not consider the economy particularly weak, but he worries that "if people go around cutting back, it will be self-fulfilling."

John and Helen Clark, who together earn more than $100,000, have kept their investment and Christmas plans on track, with little regard for the effects of Black Monday.

"We're not going overboard on anything," said Helen Clark, a contract administrator for Honeywell, who said the family's Christmas spending will be about the same as in previous years. "The stock market problems haven't changed anything, not negatively anyway."

The Clarks got their money out of the market before Oct. 19 and have transferred it to more conservative money market instruments. Their plans to invest in a town house as a rental property are proceeding though they haven't yet found what are they are looking for.

John Clark, a retired Marine colonel who runs a market development company, said it is probably too soon to make definitive judgments about the economy, but he senses that while "people don't seem to be terrified, they're cautious."

Natalie and Mykl Barron, braced by a 10 percent increase in sales, said they feel confident that doughnuts are immune to stock market swings, particularly in lower-middle-income communities like the one around their shop near Capital Plaza Mall.

"Money was already tight for a lot of people around here," said Natalie Barron. "The stock market problems are taking money from people who already had money."

Though they have resumed spending on small pleasures, they are trying to trim their debts, with their income halved since they bought into the doughnut franchise last March. They are using one credit card instead of four, selling shares of two vacation properties, and Natalie, formerly an accountant for Geico, is planning to resume accounting and to do the shop's books part time.

As the local poll results show, the level of anxiety is greatest among consumers whose economic margin of security is thinnest.

Nearly three of five area respondents with household incomes of less than $20,000 said they had reduced personal spending since Oct. 19, compared with about one-third of those with household incomes of $20,000 or more.

For couples such as Diane and Jerry Jeffers of Fairfax County, with an ill son and astronomical medical bills, almost anything that happens in the economy is eclipsed by their personal trials.

When the rest of the country was on a spending binge, Diane, who quit her job to take care of 2 1/2-year-old Matthew and his two healthy brothers, did Christmas shopping in July and August, buying toys and clothes at half price. "I don't think we overdid it," she said.

With Jerry's $34,000 income as a United Parcel Service delivery person, and family spending already squeezed to the limit, the couple worries how to finance possible experimental brain surgery at Johns Hopkins Medical Center for Matthew.

"I'm not sure where we'd get the money," said Diane. "We'd get a loan or sell our house, or do whatever else it took."

Attempts by economists to sum up the impact of consumer retrenchment on the economy have run up against a wall of imponderables.

The Conference Board's economic forum of 12 analysts said they expect a "less than sparkling 1988" because of a weakening in demand for consumer and capital goods.

But the picture, at least for now, has been brightened by a continued lowering of the unemployment rate, moderate inflation and hopes for a stronger expansion in business expenditures on plant and equipment next year.

Despite gloom-and-doom scenarios painted since the market's precipitous October fall, the nation's purchasing managers, in their semiannual economic forecast, said they expect strong growth next year, spurred by expanding exports and increasing capital expenditures.

Tempering the optimism of purchasing agents, however, is a recent accounting of 12 Federal Reserve district banks, many of which report overall economic expansion but "widespread evidence of increased uncertainty about future growth in demand."

"The bending of consumer confidence will have a temporary negative effect," predicted John Tuccillo, chief economist for the National Association of Realtors, which also predicts slower existing home sales next year. "But there won't be a recession and it won't prohibit the economy from rebounding in the second half led by the trade sector."

Will 1988 produce recession or a gradual readjustment to slower but sustainable growth? The answer defies prediction, in large part because of the fundamental mysteries of consumer behavior, a mix of impulsiveness and rationality, multiplied by millions of individual psychologies and changing economic circumstances.

Washington Post polling director Richard Morin and staff writer Karlyn Barker contributed to this report.