OUR PRICES ARE LOW, LOW, LOW

Is bargain aisle also deflation alley?: Low and falling prices are becoming ingrained in the consumer psyche - for better or worse. (Ron Scherer, June 18, 2003, The Christian Science Monitor)

Cost-conscious shoppers have been seeing prices plunge on goods such as computers, blue jeans, sandals, and even Harry Potter card games. Bargains are evident from Circuit City to the local auto mile. And while food prices haven't fallen overall, alert buyers at this Stop & Shop can find hot deals from Aisle 1 to Aisle 10: half-price bottled water, discounted razors, and more.

Welcome to "I can get it for you cheaper" America. It's a phenomenon that has Alan Greenspan watching prices as closely as Mr. Tamres. The Federal Reserve chairman worries that tumbling prices on many goods - while they make shoppers happy - could lead to broader deflation that harms the economy. [...]

The low prices are having an affect on the way consumer expectations. The University of Michigan Surveys of Consumers has found that consumers expect the inflation rate to average 2.6 percent annually for the next 10 years. "It's lowest since we started asking in the mid-1970s," says survey director Richard Curtin.

Here's the question: subtract out those goods and services where the Federal government artificially drives prices higher--housing, medicine, education--and is there anything you think will cost more a few months or years from now than it does today? And if we undertook a rational reform like putting people into Medical Savings Accounts, who thinks that health care prices wouldn't start falling too? Posted by Orrin Judd at June 24, 2003 6:59 PM