Federal Reserve Bank of Chicago President Austan Goolsbee joins ‘America Reports’ to discuss the economic conditions it would take to further lower inflation.
We are all feeling the effects of stubborn and persistent inflation. When the current administration tells us inflation is coming down, we must remind ourselves that only means already high prices are going up slower. When a few large pizzas, some salads, and garlic knots cost you $100, you begin to realize just how expensive life is getting for Americans.
So, is there any chance that prices will ever come down? The one thing, good or bad, that could make that happen is the D word: Deflation.
Deflation, characterized by a general decline in prices for goods and services, is a stark contrast to inflation. While inflation erodes purchasing power, deflation increases it. However, deflation can signal severe economic distress and widespread economic stagnation. Understanding how deflation can occur in the United States involves a combination of economic factors, policies and external influences.
Will prices ever come down? (istock)
Decreased Consumer Demand: When consumers and businesses expect prices to fall, they may delay purchases and investments. This reduced demand can lead to an oversupply of goods and services, forcing prices downward.........