Q & A with Merrill Economist

In this weekend's Barron's there was an article that featured a Q & A with Merrill Lynch Chief Economist David Rosenburg. He is credited with calling the current economic slowdown far before anyone else and makes interesting predictions about American Households' spending patterns in the future:

Here is a excerpt from the article:

Q: Will we notice profound changes in the nature of the U.S. economy when the business cycle rebounds?

A: Profound, profound, profound. Frugality is going to be a source of pride. It's no different than how in 1972 you saw a lot of Lincolns and Cadillac Sevilles in the dealer lots. Three years later you were in the crusher. We're going to be as a consuming nation, trading down, getting smaller, focusing on savings, repairing our balance sheets. Take a look at the median age of the boomer, they're only within 10, 12 years of retiring. I think that's going to have a big impact on savings, and the choices of savings in that process, a focus on less risk, and more on income and safe dividends.

Q: Will I be able to get the access to credit I need to buy the gadgets I want?

A: It will all come down to your creditworthiness. I think that lots of things are going to be changing. Our attitude toward debt is already in the process of shifting. For lack of a more exciting term, we're going to learn to live within our means a lot more than we did in the past 20 years. I think we will ultimately come out of this a lot stronger. We bloated up on debt in years of over-consumption. And we've suffered from a coronary, and we're going through the bypass surgery now. Inevitably we will be healthier. But we will have to follow the doctor's orders and have a healthier diet.