Much hand-wringing is taking place on both sides of the border as to whether or not North America is on the cusp of a deflationary spiral.
Deflation has a wholly negative impact on the economy. Prices become depressed, not because manufacturers get more efficient (like what happens when consumer electronics become cheaper with time) but because delayed purchases force an increase in supplier inventory. There's an article about it here.
Others, however, suggest that the softening of markets, especially in the housing sector, is just a long-awaited correction after a period of unchecked growth. See this.
So which is it? Is North America doomed to fall into a deflationary vortex? Is this just a market correction that's seeing values fall to reasonable levels? Or is it some combination of the two?
Deflation has a wholly negative impact on the economy. Prices become depressed, not because manufacturers get more efficient (like what happens when consumer electronics become cheaper with time) but because delayed purchases force an increase in supplier inventory. There's an article about it here.
Others, however, suggest that the softening of markets, especially in the housing sector, is just a long-awaited correction after a period of unchecked growth. See this.
So which is it? Is North America doomed to fall into a deflationary vortex? Is this just a market correction that's seeing values fall to reasonable levels? Or is it some combination of the two?
