The Frugal Economy: "Times are hard, you know*" ~ Brand Mix

Monday, October 13, 2008

The Frugal Economy: "Times are hard, you know*"

Is there anyone out there who thinks we're not heading for an all-time doozy of a recession? You don't? Well then, read this. The rest of us will wait. (Time passes.) OK, now we're all back and on the same page, let's talk about the recession will affect consumption.

Specifically, do you think that the recession will lead to a New Age of Frugality and a different attitude to buying? BusinessWeek says that Americans' charge-it culture is getting an overdue reality check and that thrift and penny-pinching are already taking hold. The kind of thing to expect in the future perhaps evidenced in a recent Gizmodo post titled: Zero-Cost Gadget Upgrades For the Next Great Depression which listed the best hacks to "breathe life" into old hardware.

Even better than buying the right thing is buying nothing at all
Tom Fishburne's recent post asks: "How will ethical brands fair when everyone is counting their pennies (particularly brands that command a premium)?" Mrs. Normal thinks she has the answer with the idea of "unshopping" explaining: "There’s no such thing as eco-shopping or ethical shopping. There’s just - not shopping. The catalogues and web sites urging you to buy ‘ethical’ things are still part of the problem – they’re in it to make money like everybody else." Spending more money just to impact the environment a little less may seem quite dated if we head into a new era of austerity.

Financier George Soros approaches the question from a different perspective. He's talking about the end of a 25-year "super-bubble" where, based on too much credit and too little regulation, the U.S. has lived far beyond its means. Soros does not think we should despair, however. He thinks that consumption can be replaced as the motor of the economy with a new motor aimed at combating global warming.

His thoughts: "I think we all have to consume less. We will consume less because we will have to. And rather than being unemployed, let's keep employment up. We'd use it for dealing with global warming. That, I think, is the way that this could work in the right way."

It's certainly a neat idea--adjusting to a new era of less consumption by addressing one of the damaging consequences of over consumption. But, I guess my question is this: Is the doom-laden opinion of late simply an over-reaction triggered by the deluge of calamitous financial news? Are attitudes about consumption really going to change all that much or are people just going to tighten their belts for only as long as they have to?

* Title Quote from Chitty-Chitty Bang Bang when the car nearly gets sold to the mean scrap man on his horse.

1 comment:

Jeffry Pilcher said...

Economists are grossly underestimating the impact on our economy if we make the shift from "Wants/Credit-Driven" to "Thrift/Savings-Based."

Glad you liked the presentation too. Props to Merrill Lynch for releasing the presentation —something relevant and meaningful. Right now, their brand could desperately use the lift it gets from having this kind thing out there right now.

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