Key Points
- As shoppers await price cuts, retailers like Home Depot say their prices have stabilized and some national consumer brands have paused price increases or announced more modest ones.
- Yet some industry watchers predict deflation for food at home later this year.
- Falling prices could bring new challenges for retailers, such as pressure to drive more volume or look for ways to cover fixed costs, such as higher employee wages.
You can see the massive deflation happening in China right now as youth unemployment hits 25%.
No thanks. We don’t want that over here. Inflation is (and always will be) better than mass unemployment. If you want lower prices, open up our trade with others (IE: Import China’s goods since they’re suffering from deflation: we can benefit from those lower prices).
No thank you, we do not need China dumping their goods in our markets. Just look at the EV dumping going on in the EU.
Decoupling is why you see massive deflation and unemployment in China and part of the reason why you don’t see it in the USA. Opening our markets to them would doom many of our industries and drive up unemployment for our youth.
I thought the US loved free trade? Oh, only when it benefits the corporate masters, I see.
No, the US does not love free trade. The current global economic environment where anyone can trade anywhere was established during the twilight of WW2 during a meeting at Bretton Woods.
Historically Imperial powers would occupy the vanquished, dismantle their adversaries economic systems and make them vassal states. They would then close their systems to outside trade and reap the rewards.
There were two problems with that for the US, first it would take a large military to do this (and we did not want to field those armies long term), second it meant we would probably have to fight the Russians directly as they would want to become an imperial occupying force (which they did) and would probably try to compete with us (which they did).
Instead we decided to bribe the Europeans into fighting the Russians for us. Hence the current global order where anyone, can trade anywhere for anything. We backstopped freedom of the seas with our fleet. Opened our markets to trade and provide financial assistance to help rebuild Europe. In exchange the European powers subjected their foreign policy to us and agreed to fight the Russians.
Europe, Japan and the rest of the Western world embraced this new economic system and it became foundational to their economies. To the US this was just a security deal, yeah we opened our economy but we never fully invested our economy in it. Which is why you don’t see many regional free trade deals passed beyond NAFTA after the end of the Cold War. We prefer to negotiate bilaterally with individual nations. We rarely ever open our markets without major concessions from the other side. We are also becoming more and more insular and are slowly pulling away from the global order we created because for us it was always just a security pact and we really don’t need it in a post Russian/USSR world. There is no popular support for NATO or any of the other institutions we created. Trump is a brainless Russian meat puppet but he knows how to read a room and the US electorate aren’t enthusiastic about staying connected to the rest of the world and subsidizing the costs maintained the current order.