Sound the alarm. Lock the doors. Hide the remaining cash in the mattress. We have a new troubling economic indicator to worry about — “the Latte Index.”

ABC television reported this weekend on a business slowdown at the world’s largest chain of coffee stores, Starbucks. The implications are apocalyptic. “Call it the law of the latte,” reporter Bianna Golodrga, said. “For years Americans have been paying $5 and more for Starbucks’ gourmet coffee.

But now the world’s largest coffee maker admits it needs a pick me up. For the first time ever, lagging sales are prompting the company to advertise on TV. Part of the problem, people now have less money for the little luxuries because they’re spending on things like fuel.”

There’s no question that the rising cost of energy and mortgage rates are taking a bite out of the wallets of many Americans right now. To link these economic forces, however, with problems at Starbucks, might be like making a venti instead of a tall: The coffee conglomerate boasted a 35% increase in profits during the fourth quarter, and all the buzz is over only a decline of about a 1% in customer traffic.

Starbucks’ problems are more rooted in the dynamics of the coffee drinks market that it helped to create. Competitors are squeezing in from both sides. At the high end of the market, Peet’s Coffee & Tea, is appealing to a crowd that values a finely-crafted, individually pulled shot of espresso. A brand that started on the low end, Dunkin’ Donuts, began offering lattes several years ago, is on the march out of its stronghold in the Northeast and spreading into other parts of the country. And McDonald’s even began selling gourmet-friendly Newman’s Own coffee in 2003. The fast food chain just announced a plan to make its joints a “beverage destination.” McDonald’s USA president, Don Thompson, said: “Our speed, our convenience, the value that we can afford to customers without quality comprise will make us a formidable player.”

When Dunkin’ Donuts started selling lattes, Starbucks officials were quick to put up their noses at their more plebian competitors. “We stand behind the quality and handcraftedness of our product,” Starbucks’ marketing manager told the Boston Globe.

At the time, in 2003, Starbucks promoted the way its “baristas” made individual shots of espresso. But in order to expand into new locations without taking as much time to train employees, the company installed automatic machines, instead of relying on more the more time-consuming, personal-touch drinks. So much for handcraftedness.

What makes all of this somewhat remarkable is that next week will mark the anniversary of a major Starbucks-related event. Back in November of 1999, Starbucks was targeted as the embodiment of all that was evil in the movement of global trade.

Protesters converged on Seattle, the birthplace of the chain, to protest a meeting of the World Trade Organization. On November 30, protesters vandalized and looted a Starbucks in Seattle and other stores in the city were hit as well.

Now, the Iraq War and President Bush have long replaced Starbucks as targets of protest. And Starbucks’ commitment to “socially responsible buying guidelines,” trumpeted on the company’s Web site, seems to have mitigated some of the ire. If Starbucks has been guilty of anything, it is its annoying, almost embarrassing, omnipresence. So much so that the buzzwords of the chain’s ridiculous quasi-European lingo have entered the common lexicon: lattes, mochas, cappuccinos, frappuccinos, worst of all, “grande.”

A “grande” at Starbucks, as most people now know, is a medium, although it is humiliating to go into any other coffee competitor and order a “grande” to receive a dull blank stare from workers wearing anything other than a green apron, as I have done. Dunkin’ Donuts mocked its competitor with a 2006 TV ad with the words “is it French or is it Italian? Perhaps Fritalian?”

America will not rise or fall depending upon what happens to Starbucks. Too much was made of Starbucks back in 1999 when its outlets were vandalized in Seattle. And today’s consternation seems overblown as well. When it comes time for my mid-afternoon break, I’ll be sipping a triple grande non-fat decaf americano.

Mr. Gitell (gitell.com) is a contributing editor of The New York Sun.