It's time for Crisis at a Glance!
It's a good day to review the import of price Deflation. Because the Labor Department this morning reports consumer prices FELL in August.
Core prices like food hardly rose at all - one tenth of a percent on average. But the over CPI fell one tenth of a percent, mostly because gas prices fell four full percent. Even airplane tickets got cheaper in August.
For years the main inflation driver has been oil, so it makes sense that with oil prices plunging almost everything else would become cheaper.
Now let's explain why deflation can be a bad thing. Clearly it's a good thing for you personally. Really good, if you're on a fixed income. Not good, if you're paid on commission. Because in the larger economy, deflation actually DETERS consumer spending.
The reason is, why buy something today if it could be cheaper tomorrow? Deflation is like a macro-economic version of the Liberty House clerk, back in the day, telling you not to buy something because it'll be on sale Saturday.
And that's Crisis at a Glance!!!
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