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Opinion
Justin Wolfers

Where Is the Panic Over Deflation?

Price indexes suggest that the U.S. is experiencing deflation, not inflation, though Federal Reserve policy makers don't seem very concerned.

A quick point worth noting from this morning's gross domestic product report. The report is largely a yawn, containing few interesting revisions to earlier estimates of economic progress in the second quarter. But there's one number that caught my attention. The Bureau of Economic Analysis has revised its estimates for the personal consumption expenditures price index. It's an important number, because this is the index the Federal Reserve targets. And remember, it's aiming for inflation of 2 percent.

Instead, the index fell in the second quarter. That is, the U.S. is experiencing deflation.