Call it the pizza indicator.

And it says that as of the end of the third quarter, at least, consumers were continuing to cut back on spending. That’s not good news if you’re hoping that the economic recovery will get here soon.

Here’s what the indicator says:

In the third quarter pizza sales at Yum! Brands (YUM) Pizza Hut franchise were down 13% from the third quarter of 2008.

That by itself wouldn’t mean much. Maybe people were buying fewer pizzas at Pizza Hut because they didn’t like the new table cloths.

But it’s not just that Pizza Hut sales were down. Sales of frozen, ready-to-bake pizzas were up.

Kraft Foods (KFT) reported that sales of its frozen Digiorno pizzas had seen strong growth since the start of the slump. Wal-Mart (WMT) has seen solid sales of its “take and “bake pizza. As part of its promotion, the company has claimed that a family that ordered a pizza once a week could save $312 by buying a frozen-bake-at-home pizza.

Kraft and Wal-Mart are reporting is strong growth in what amounts to high-end frozen pizza. This segment isn’t made up of your standard take it home frozen pre-cooked pie that just has to be defrosted and heated. A Digiorno pizza is frozen but raw and it has to be baked for 23-28 minutes.

It’s cheaper than eating out but you can easily find a cheaper frozen pizza than Digiorno.

I think this adds support my idea that after the recession is over consumers will be looking to spend less but to get more luxury than the lowest-priced brands deliver.

Value won’t be defined as just less money spent but as less money spent to deliver as much quality as possible.

That’s a tough target to hit. As you can see in the schizophrenic nature of much current advertising.

Last night, for example, I saw a L’Oreal ad on TV with Andie McDowell as usual touting the benefits of the company’s age defying cream. But the ad ended with a pitch on price. The product was only $22 or something in that neighborhood as compared to the hundreds of dollars you’d spend on luxury creams.

Nothing down scale about an ad with Andie McDowell in it, of course. But still an ad that ended with a pitch on value.

This should be a really, really interesting recovery for brand managers.