The Associated Press (AP) is running cover for the rampant inflation experienced under Joe Biden by claiming that falling prices would actually be a bad thing.
In an article by the AP’s economics writer Paul Wiseman, he makes the case that lower prices would be worse for the economy as it is a sign of deflation:
Wouldn’t it be great if prices actually fell — what economists call deflation? Who wouldn’t want to fire up a time machine and return to the days before the economy rocketed out of the pandemic recession and sent prices soaring?
At least prices are now rising more slowly — what’s called disinflation. On Friday, for example, the government said a key price gauge rose 0.3% in February, down from a 0.4% gain in January. And compared with a year earlier, prices were up 2.5%, way down from a peak of 7.1% in mid-2022.
But those incremental improvements are hardly enough to please the public, whose discontent over prices poses a risk to President Joe Biden’s re-election bid.
Wiseman goes on to make the case that prices going back to what they were before Biden took office would have a detrimental impact:
“Most Americans are not just looking for disinflation,’’ Lisa Cook, a member of the Federal Reserve’s Board of Governors, said last year. “They’re looking for deflation. They want these prices to be back where they were before the pandemic.’’
Many economists caution, though, that consumers should be careful what they wish for. Falling prices across the economy would actually be an unhealthy sign.
“There are,’’ the Bank of England warns, “more consequences from falling prices than meets the eye.’’
Deflation is, of course, a well known phenomenon that can have serious negative economic consequences. However, what most Americans probably wish for is that inflation had never been allowed to skyrocket in the first place, instead remaining at a healthy level of between one and two percent.
Hellbound and Down 