It may seem strange to bring up deflation when surveys show that inflation is the public’s number one worry.
But who would have thought that inflation would become a big issue, say, just two years ago?
Right — a relatively small percentage of people. The point is: Things can unexpectedly change — fast.
Consider the price of commodities:
The Goldman Sachs Spot Commodity Index hit a high on March 8, and so did the Bloomberg Commodity Index. Crude oil futures made an intraday high on March 7 and a closing high on March 8. Platinum reached a closing high on March 7.
The July Global Market Perspective, a monthly Elliott Wave International publication which covers 50-plus worldwide financial markets, mentioned other commodities which also made highs during the same time as it showed this chart and said:
Aluminum, copper and zinc topped [on March 7], as did nickel and lead. The significant price declines since March 7-8 suggest a burgeoning slowdown in world economic activity and may mark a tipping point from inflationary pressures to deflationary ones.
So, you see why deflation is not such a far-fetched notion after all.
Indeed, at least a couple of other factors point to “a burgeoning slowdown in world economic activity.”
The first is widespread layoffs. Just a few months ago, technology companies were on a major hiring spree, which is in stark contrast from what’s going on now (Marketwatch, June 21):
From Great Resignation to Forced Resignation: Tech companies are shifting to layoffs after a huge ramp up in hiring
Layoffs have also been notable in cryptocurrency and real estate companies.
Another indication of a global economic slowdown can be summed up in this headline from FreightWaves, a supply chain industry information company (June 7):
US Import Demand is Dropping Off a Cliff
U.S. containerized imports from all countries declined 36% year-over-year.
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