The U.S. Welcomes the Good Kind of Deflation
The U.S. is enjoying a bit of good deflation mostly because advances in shale oil production have flooded the market with cheap oil.
Photographer: Daniel Acker/Bloomberg
For the U.S. economy, the deflation that’s seizing Europe sounds like the rumble of distant thunder. The low-pressure system probably won’t swirl across the Atlantic, but the risk of deflation in the U.S. can’t be completely dismissed.
As the world’s biggest economy, the U.S. is more insulated than European nations, making it better equipped to withstand troubles abroad. U.S. gross domestic product is likely to grow 3.2 percent this year, up from an estimated 2.4 percent in 2014, according to the median estimate of economists surveyed by Bloomberg. Job growth is running at almost 250,000 a month, creating a virtuous circle: When people get hired they spend more, putting money into the coffers of companies that go out and increase their staffing.