Lately I have seen a few articles that have openly stated that deflation would be a “positive” for individuals. There are various reasons given for this conclusion.
One of the reasons that has been given is that deflation would lower the price of goods, and thereby increase purchasing power.
My thought on the matter is that the overall topic of deflation and its effects is a complex one. Adding to the complexity is the definition of deflation. Most people define deflation in terms of CPI, but of course there are many different ways of defining the concept.
As to whether the purported “benefits” of deflation would happen, especially the increase in purchasing power, is difficult to answer as it relies on many different factors. However, I do think that given today’s economic environment, it would be difficult to draw the conclusion that deflation would be a net positive. Sure, if deflation (as defined in terms of CPI) were to occur, there would be some benefits, such as the aforementioned (theoretical) increase in purchasing power. However, there would likely be significant other negative factors that could, and probably would, overwhelm whatever benefit the increase in purchasing power would have.
SPX at 1016.4 as this post is written