U.S. Outlook: Deflation arrives in the United States

Scott Anderson
Posted by Scott Anderson
Chief Economist

With the January price data now coming in, the U.S. price deflation is as dramatic as I thought.

Graph showing drop in producer prices.It’s clear that commodity or crude-good prices are driving the declines.

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. 20.

Key observations:
  • Outside of the Great Recession of 2009, there was only one time producer prices dropped this much in 12 months in the post-war period, and that was 1949.
  • Relief may soon arrive at the grocery store.
  • If crude oil prices can stabilize near $50 per barrel, the current bout of U.S. deflation could dissipate quickly.
  • Market-based measures of inflation expectations, while still depressed from normal levels, have already stabilized and moved higher in recent weeks.

Click here to read my full report.

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