Do certifications ever hurt your chances of landing work in a down economy?

I have been thinking about taking some developer certification exams, but do not want my certs to hinder any possibilities that I may have. Besides, if one certified person can perform the work of two or three non-certified, then isn't any additional expense of a higher salary worth it.

You pose an interesting question, but it's not as dire a situation as you might think. Generally when companies cut back on spending, the value of a certification gets cut back along with everything else; or the job gets outsourced to a far cheaper labor market, like China or India. In either case, not having a certification is by no means an advantage.

The whole point of certification, in fact, is to provide a way for all parties involved to understand what a person knows and can do given that they've earned some specific certification.

Normally, the productivity gains that obtaining certification is supposed to provide are less than 100%. So, it's very seldom the case that one certified person can do the work of two or three uncertified folks. (It's usually more like a 20-40% productivity gain, in fact.) Even so, the salary multiplier for possessing a cert seldom matches the putative productivity multiplier that is associated with the cert. If these two matched, then all emloyees would cost exactly the same when cost vs. productivity is factored in. Companies like paying a little more for more qualified people in exchange for some leverage on their return on investment; but there's no economic incentive to justify the same multiplier for pay as for productivity.

All of this said, if you have the time, energy, money and inclination to get a developer cert, I say go for it. You'll learn some useful stuff and be a better professional as a result. As long as you're not in a dire situation if you can't recoup your investment quickly, it will still pay off in the long run.