How Soon Will We Face Deflation?

In the post-WWII United States, the rate of inflation has a very clear tendency to fall whenever the unemployment rate rises above 7%:





Workbook2





When the unemployment rate has been above 8%, the average fall in the annual CPI inflation rate over the next two years has been 4.5 percentage points.





Our current annual inflation rate is about 1%:





http://sub1.economagic.com/em-cgi/daychart.exe/form





Does this mean that two years from now we can expect our annual inflation rate to be -3.5%--that we can expect fairly rapid deflation? The odds...

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Published on August 11, 2010 11:42
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