U.S. Outlook: U.S. deflation not the end of the world

Scott Anderson
Posted by Scott Anderson
Chief Economist

Plenty of doomsday articles are being written about deflation these days, but will the U.S. have the same difficulty as Europe?Graph showing sectors of the US economy where deflation is an issue.

A further look into causes and transmission mechanisms may help.

For a detailed look at this and other developments, see my full weekly analysis. Highlights are outlined below, followed by a link to the full U.S. Outlook report, delivered on Feb. 6.

Key observations:
  • The U.S. deflationary pressures are mainly coming for only a handful of sectors: energy, transportation, and apparel.
  • Central bankers and economic textbooks have sounded warnings about deflation’s potential dampening effects on aggregate demand.
  • It’s important to remember that the U.S. labor market is in a far different place right now than Europe’s.
  • The evidence garnered so far suggests U.S. consumers and businesses are behaving just as we would expect.

Click here to read my full report.

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