Last week, we saw fawning Wall Street mistakenly pointing to Wal-Mart's (NYSE:WMT) mediocre sales performance as proof that our consumer-led economy is on good footing. As I explained here, this was exactly the wrong conclusion to draw. Most other, higher-end retailers did poorly, suggesting consumers were moving down the market.

Want a better economic bellwether? Take a look at today's announcement from the shamefully self-anointed "America's Builder," D.R. Horton (NYSE:DHI). Try this on for size: Home sales drop 48% in the fourth quarter. Home sales off by 41% for the full year.

Unfortunately, there's proof in today's release that things can get much uglier. Cancellation rates for the fourth quarter were 48%. I say again, 48%. When nearly half your sales fall through, what does that say about the American consumer?

How about, "They were overextended house-flippers and now that they can't afford reasonable mortgages, they can't afford homes." The wild cards are these: What portion of consumer discretionary spending was based on the fiction that home prices always go up? How much money do American consumers have when they can't extract "equity" from their houses?

My guess is "not enough." There's a reason Citigroup (NYSE:C) is conspiring with Hank Paulson and the Treasury, plus JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC), to support prices on consumer-asset-backed equities they can't unload on the market. If American consumers were so well off, those assets wouldn't be so worthless. (Bank of America is pretty busy with the Superman act these days, having already ridden to the rescue of the green-bracelet crowd at Countrywide Financial (NYSE:CFC).)

When an economy depends so heavily, as ours has, on an inflating asset bubble, companies like Horton and the other homebuilders serve as canaries in the coal mine. They're wheezing pretty hard about now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.