Seeker of Truth
06-19-2003, 03:00 PM
Reuters
What Deflation? U.S. Consumers Just Keep Spending
Thursday June 19, 1:40 pm ET
By Andrea Hopkins
WASHINGTON, June 19 (Reuters) - Maryland father-of-two Nat Bottigheimer has heard the hype about falling inflation, but he has no qualms about pushing ahead with an $80,000 kitchen upgrade.
"The only inflation I'm worried about now is the kids -- they're getting larger and the kitchen is staying the same size," Bottigheimer said, nodding at the daughter in his shopping cart at a giant home Expo Design Center north of Washington.
While the risk of falling prices -- the deflation demon that crippled Japan -- has caused concern at the Federal Reserve, Bottigheimer embodies the consumer culture that has held up the shaky U.S. economy since the 2001 recession.
The transportation analyst believes the economy will probably get "a little bit worse" before it gets better, but, like many Americans, he's not willing to defer spending to see if the distant drum of deflation fears heralds real danger.
"It might not happen. I just feel that what I have to do outweighs whatever might be ahead. And whatever happens, I don't think it will be so bad it will make our current spending plans unwise," Bottigheimer said with a shrug.
It is this sort of confidence that stands between the U.S. economy and deflation -- a general decline in prices not seen in the United States since the Great Depression.
The Fed has said the risk of deflation is only minor, and most economists agree. But with an underlying inflation rate running at 1.6 percent a year -- just above a 37-year low -- the fear is that consumers may begin to expect prices to fall and put off purchases in anticipation of future bargains.
That would spell disaster for the tepid recovery.
More @ biz.yahoo.com (http://biz.yahoo.com/rf/030619/economy_deflation_consumers_1.html)
What Deflation? U.S. Consumers Just Keep Spending
Thursday June 19, 1:40 pm ET
By Andrea Hopkins
WASHINGTON, June 19 (Reuters) - Maryland father-of-two Nat Bottigheimer has heard the hype about falling inflation, but he has no qualms about pushing ahead with an $80,000 kitchen upgrade.
"The only inflation I'm worried about now is the kids -- they're getting larger and the kitchen is staying the same size," Bottigheimer said, nodding at the daughter in his shopping cart at a giant home Expo Design Center north of Washington.
While the risk of falling prices -- the deflation demon that crippled Japan -- has caused concern at the Federal Reserve, Bottigheimer embodies the consumer culture that has held up the shaky U.S. economy since the 2001 recession.
The transportation analyst believes the economy will probably get "a little bit worse" before it gets better, but, like many Americans, he's not willing to defer spending to see if the distant drum of deflation fears heralds real danger.
"It might not happen. I just feel that what I have to do outweighs whatever might be ahead. And whatever happens, I don't think it will be so bad it will make our current spending plans unwise," Bottigheimer said with a shrug.
It is this sort of confidence that stands between the U.S. economy and deflation -- a general decline in prices not seen in the United States since the Great Depression.
The Fed has said the risk of deflation is only minor, and most economists agree. But with an underlying inflation rate running at 1.6 percent a year -- just above a 37-year low -- the fear is that consumers may begin to expect prices to fall and put off purchases in anticipation of future bargains.
That would spell disaster for the tepid recovery.
More @ biz.yahoo.com (http://biz.yahoo.com/rf/030619/economy_deflation_consumers_1.html)