Why Inflation Has Investors on the Lookout for ‘Demand Destruction’
This article is for subscribers only.
When shoppers get a shock from higher prices for things like cars or dishwashers or cheese, there’s a point at which they turn away. Economists have a gloomy-sounding term for this recoil: They call it “demand destruction.”
Demand destruction is when persistently high prices for a certain good lead to less demand for that good. The term gained traction in 2022 as policymakers, investors and company executives looked for signs that inflation was changing consumer behavior.