Deflation in the United States economy occurs when prices decline. Government, personal and investors’ spending can lead to this price decrease, which is the opposite of inflation. Deflation represents a negative economic factor to the extent that it reveals a jump in the unemployment rate and plummeting demand for goods and services in the economy. Just as inflation can lead to disastrous effects in the economy, economic professionals recognize deflation as a sure sign of depression.

Providers of goods and services in any economy closely watch a decline in prices so they can prepare for what many believe will be a devastating monetary situation. They know that a decline in prices means a decline in profits. And there is little a government can do to rectify deflation. If you’re like most business owners, you’ll agree that discovering more about this economic indicator ensures that you'll stay on top of significant market trends:

1. Find the most trustworthy sources for deflation statistics.

2. Get deflation advice from leading economics experts.

3. Become your own best consultant on the causes and effects of deflation.

Action Steps
The best contacts and resources to help you get it done

Get the most accurate and timely deflation information available

As with any other key economic data your business relies on, reports concerning deflationary movement within the economy must come from reliable sources.

I recommend: The Federal Reserve not only publishes economic reports and data containing deflation information, it also makes available the text from testimony given by his Chairman to the United States Congress. This testimony will officially state the Federal Reserve’s position on whether the economy remains in a state of inflation or deflation. Contact Economy in Crisis.Org for data it relies upon to make economic predictions.

Take advantage of the industry expertise from a deflation consultant with a reputable firm

You'll be privy to economic thought from a professional team of specialists and financial strategists who can help you assess the true impact of deflation on your company.

I recommend: Consulting firm Bates White offers economic advice and help with deflation issues to Fortune 500 companies and government agencies. Contact NERA Economic Consulting for specific advice on dealing with deflation. The company’s website allows you to choose an expert with particular focus areas in economics from its extensive database of consultants.

Use online resources for comprehensive deflation training material

There's no question just how significant an economic indicator deflation presents to industry leaders. As a retailer or service provider, you can learn about the nature and extent of deflation, which can affect your enterprise goals.

I recommend: The market forecasting giant, Elliott Wave International, has published an analysis of deflation that takes you through the causes, effects, preconditions and financial impact of this economic phenomenon. Real Clear Markets provides market reports and commentary. Its extensive list of reports explains the ins and outs of deflation.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Economic experts stress the importance of understanding that while deflation may not be the worst case scenario for an economy, the factors that cause deflation require analysis so that governments and business leaders can discover potential ways to avoid this market phenomenon.