Economics editor Chris Farrell
Economics editor Chris Farrell - 
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Scott Jagow: No matter what happens with the rescue package, there are tough economic times ahead. It's going to mean some changes for families in this country. Our economics correspondent Chris Farrell calls it the New Frugality. Chris, what do you mean by that?

Chris Farrell: I think this is a major transformative moment for families. We're going to go into recession, and we're going to do all the things you do in recession where you cut back on your spending and be more cautious. But when we come out of the recession, that's not going to change. And the reason it's not going to change is lenders are going to be very conservative. Borrowing is going to be tough. The other reason -- you're not going to get big wage gains.

Jagow: Are you sure, Chris, that this will happen? Because it seems like people kind of forget.

Farrell: That's right, and that's been the experience of the past half century. And here's the change: you're not going to be able to borrow a lot of money. So you're back to what are you earning on the job. And let me tell you something -- anybody out there who's optimistic and believes that employers are going to turn to you and say, "You know, you've been working really hard, I think you need a 10 percent wage increase," hmmm . . . I don't think that's going to happen. People are going to be getting 1 to 2 percent wage increases, at the best they're going to be matching the rate of inflation. So, that's why I think it's not going to be a choice.

Jagow: But Chris, don't you think it's a good thing if we move away from our credit-drive economy and get back to the old days of spending what you have?

Farrell: Hahaha, sounds really nice doesn't it? Um, yes. What I worry about is the transition. Yes, you want to de-leverage, and we took on too much debt. But I hope that it happens over a period of many years as opposed to fairly quickly. And I also don't want to paint too gloomy a picture -- people are going to continue to borrow, but they're going to borrow more conservatively. You're not going to be putting 1 percent down for a piece of real estate, you're going to be putting 15 to 20 percent down. But you know, the transition's going to be difficult because we've been used to just being able to borrow, and you know you still get the financial services industry saying things like "Well you know, you can't make that change because it might raise the interest rates when you go to borrow." Hello, people -- you're not lending to them anyway! What are they worried about a higher interest rate? Come on!

Jagow: Ah, fun as always Chris.

Farrell: Thanks a lot.