The term “deflation” has been thrown around a lot lately, enough that a chart on the Economist’s website highlighted the term’s frequency of use in financial publications like the Wall Street Journal. Use of the term increased fivefold between August and November 20th. This number is expected to rise even higher, since a 1% decrease in consumer prices in October signals that deflation is happening in our economy. What is deflation, you ask? Deflation is a decline in prices, which is usually caused by a decreased supply of money or credit, or lower government, personal or investment spending. Now, you may think that because inflation is bad, deflation is good. Lower prices are always good, right? Sadly, this is not the case. The downside of deflation is an increased rate of unemployment. Companies don’t lower prices out of the good of their collective hearts. Lower amounts of available credit and decreased personal spending have drastically decreased the level of demand in our economy. These realities force companies to make cutbacks. So, while lower prices may help the average consumer, the slowdown in the economy and cuts in business expenditures mean that many more people could lose their jobs. --Cody

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