United States the risk of deflation, has come true. Last time the United States economy faces deflation, in March 2009, the core consumer price index (CPI) fell to a negative number.
The Bernanke-led fed (Fed) action uses a very traditional instruments: quantitative easing (QE). United States CPI fell sharply once again sounded the alarm.
But this was mainly due to energy costs plunged recently, was likely to be only temporary, as Fed Chairman Janet Yellen described the impact of crude oil prices plunge since last June. However, to determine the impact of crude oil fell by only a temporary, it must meet United States economy showed signs of continuous improvement, ignoring the deflationary pressures in Europe and mainland China growth slowed.
After all, crude oil prices led to lower gasoline prices, are United States consumer Gospel.
On Tuesday, New York crude for February fell $2.30, or 5%, to $46.39 a barrel.
On Wednesday, crude oil rebounded modestly, but supply concerns are still lingering.
Despite prices falling consumer spirits, released last week, the consumer confidence index rose to a
11-year high, which is proof, but "optimistic" and "consumption" are not fully match.
For example, the United States extremely disappointing December retail sales, did not reflect the effect of tax cuts from falling oil prices.
Deflation for the Fed to add economic problem, as prices continued to fall and could lead consumers to defer purchases, thus weakening the economy.
Another problem is deflation, if tightening continues, will weaken corporate earnings, most likely United States six years of bull markets result in the termination of this wave. When corporate earnings hurt Fed may be forced to launch revitalization measures. But this time, if the United States and overseas and deflation worries overshadowed the greed, the Fed may not be able to create demand.
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