by Sasha Cekerevac, Investment Contrarians:
We all know that consumer spending is a huge portion of the U.S. economy, making up roughly three-quarters of our GDP. Because it’s such a large part of our economy, for growth levels to pick up, we need consumer spending to continue improving.
One area that can become confusing is the inflation rate. We’ve recently seen the inflation rate far below optimal levels, and this could be a concern.
The reason why we wouldn’t want outright deflation is that this completely turns an economy on its head. You would not be interested in buying a product or investing in equipment for your business if you knew that the price continues to drop every month. This also means your income will eventually decline.
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