Five Charts That Show Deflation Is a Growing Threat
Three years after the U.S. recession technically ended in June 2009, the economy is still trying to shake off the threat of deflation. The seasonally adjusted consumer price index rose precisely zero in April from March, as falling energy prices made up for rises in other items. With slow growth and job creation, there’s a risk—not a likelihood, but a chance—that the general price level will actually start to fall, as it did for several months at the end of 2008 in the teeth of the financial crisis. Deflation is good for shoppers but it’s terrible for people who owe money because their incomes shrink while their debts don’t. It’s also bad for workers because it’s a sign of economic weakness, pay cuts, and layoffs.
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