Wednesday , 27 September 2023

Deflationary Risks Rising In the U.S. – Here’s Why (+2K Views)

Unlike a number of countries in Europe the U.S. is currently not dealing with generalrisk price declines but, that being said, the risks of such an occurrence have increased materially. Below are a number of such deflationary risks and how they might impact the U.S. economy.

By Sober Look ( from an article originally posted* under the title Rising deflationary risks in the United States.

(Sober Look is a no-hype financial blog that relies on data analysis and primary sources. Posts are intended to be succinct, to the point, with no self-promoting nonsense, and no long-winded opinions. If you are looking for Armageddon predictions or conspiracy theories, you will be thoroughly disappointed. Topics include U.S. and global economic developments and financial markets. Sign up for their daily newsletter.)

[Below are a number of such deflationary risks and how they might impact the U.S. economy:]

1. The intermediate-term market-based inflation expectations have fallen to 2009 levels – when deflation was a serious concern.

2. Wage growth is falling from a fairly stable level of 2% per annum.

3. In particular, “production and nonsupervisory employees” saw a sharp decline in wage growth – in spite of robust growth in payrolls.

4. Economists have been expecting the recent strength in U.S. labor markets, including big increases in job openings, to translate into stronger wages but just the opposite has taken place in combination with…with global disinflationary pressures and the collapse in energy as well as other commodity prices… Below is the CRB commodity index.

5. [In addition]…the PriceStats CPI trend (online-price-based CPI-tracking model) has fallen to 2009 levels.

Blue = actual CPI, orange = PriceStats index (h/t @jp_koning)

…[While] some Fed officials are quite open about taking 2015 rate hikes off the table, the markets still anticipate the first hike in late Q3/early Q4 of this year which is somewhat surprising considering that in the U.K., for example, rate hike expectations have been shifted to 2016.

Raising short-term rates in the U.S. (while the rest of the world is on hold or lowering rates) risks pushing the dollar higher and a much stronger dollar would exacerbate some of the trends discussed above, increasing the possibility of deflation in the U.S..
Putting it all together points to rising risks of deflation in the U.S.
[The above article is presented by  Lorimer Wilson, editor of and the FREE Market Intelligence Report newsletter (sample here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. This paragraph must be included in any article re-posting to avoid copyright infringement.]

*Original source:

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