Frugality is the New Black

A comment from Merrill Lynch’s David Rosenberg got me thinking, perversely enough, that one money-making trend to watch going forward will almost certainly be a burgeoning U.S. market in — wait for it — frugality.

2761733578_a816162cd0_mFrugality is going to set in

As far as I know, there are only two ways to eliminate debt. You either walk away from it, which people obviously are doing, which is why we got these write-downs and these foreclosures, or you pay it down. I think people with a FICO score that they are concerned about are going to pay that down. That means that the savings rate is going to be forced higher. This, again, is going to be very, very disinflationary. It means that fashions are going to change. It means frugality is going to set in. We’re going to be living in smaller houses, driving smaller cars and living more frugally. It’s not going to be the end of the world; it’s going to be a necessary process to truly embark on getting the balance sheets down to more comfortable levels so that we can actually embark on the next cycle.

[via John Mauldin]