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Low inflation bright spot in U.S. economy

Associated Press • Aug 27, 2014 at 3:12 PM

Since the Great Recession ended 4½ years ago, Americans have struggled with high unemployment, static pay and a slow economy. Yet they’ve had one thing in their favor: low inflation.

Well, hold the applause.

It might be unfathomable to people who still bear scars from the double-digit inflation of the 1970s, but what the global economy could use right now is a dose of higher prices.

Overall, prices are barely budging because the economy is still weak. And the reverse may be true, too: Super-low inflation has likely slowed growth from the United States to Japan to Europe. It’s why the world’s central banks would like prices to rise.

Last year, overall U.S. prices inched up just 1.1 percent, according to the Federal Reserve’s preferred gauge. Inflation has stayed below the Fed’s 2 percent target for two years.


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