Interesting to see a lot of our theories (Dec 8: Do the Bottom 80% of Americans Stand a Chance?) now hitting mainstream media... the open question of course is this a cyclical change (during a recession) or the start of a newer (and frankly lower) standard of living as more are forced to live within their means. We continue to believe the latter but we won't be proven correct or incorrect until we look back in 5-10 years. But just going from a national savings rate of 0% to 5-6% would be a switch of significant magnitude for our entire consumption culture. The difference to me is this decision to consume less and within means won't be a choice, but a necessity. After losing house ATM, and then maxxing credit cards, and emptying out 401ks and IRAs - there won't be anywhere left to turn.

No matter what you believe in the "long run" believe this - this is a consumer led recession - our first since the 70s/early 80s. It is very different than the corporate led recessions of the early 90s and 00s and I think Wall Street is just waking up to this after living in a (gaudy) cocoon. I guess when job losses actually hit the financial sector, it has a way of waking one up to how the "other half... err 3/4ths... err 9/10ths... live"

• On a shady lane in New Hope, Pa., a quiet revolution in American culture may be taking shape. Here, a family of four lives in a white, colonial-style house in a manner that once would have been considered All-American but more recently has been seen as just plain weird: They're frugal. Meet Leah Ingram, Bill Behre, and daughters Jane, 13, and Annie, 11. They walk most everywhere, they rarely eat out, they sometimes buy clothing at consignment shops, and they turn the lights off when they leave a room. Theirs is no hard-luck-in-a-recession story. The Ingram-Behre family is solidly middle-class, fully employed, and not especially threatened by the conniptions gripping Wall Street.
• That's now. A little more than a year ago, the family was ensnared in America's consume-at-all-costs culture. During the days of soaring home prices and easy credit, they took out a $101,000 home-equity loan on a previous house and spent lavishly on a lifestyle upgrade—going on three cruises in two years and taking the kids on annual pilgrimages to Disney World. "After 9/11 it became patriotic to shop, and we became as patriotic as anybody," (USA! USA! USA!)
• Ingram and Behre are harbingers of a dawning Age of Frugality. People who overconsumed during the past decade are now rejecting extravagant lifestyles. They're spending less, and more wisely. Some are getting their finances in order. Others are fearful of losing their jobs, shocked by investment losses, or hunkering down amid the general uncertainty.
• The penny-pinching is already showing up in the numbers; this quarter could mark the first fall in personal consumption in 17 years.
  
• And with credit tight and Americans loaded down with $2.6 trillion in personal debt, consumer borrowing dropped in August, the first such contraction since 1991.
• Menzie D. Chinn, who teaches economics at the University of Wisconsin, figures consumers won't be in a position to spend freely for five years.
• Which brings us to what John Maynard Keynes called the paradox of thrift. What's good for the individual, argued the famous economist, can ignite or deepen a recession.