Many people are worried that economic instability will lead to inflation. However, the Jerome Levy Forecasting Center warns that this view is exactly backwards — it is not inflation, but disinflation and ultimately deflation that lie ahead.
The main influence on price trends will most likely be the deflationary effect of high unemployment. This is likely to last for at least a decade, and could stretch into the 2020’s. At the same time, many of the factors some have predicted will cause inflation — aggressive monetary policy, large deficits, and monetary depreciation — most likely will not do so.
According to the Jerome Levy Forecasting Center:
“... [T]he problems in the economy are so deep that the deflationary forces will more than offset the inflationary influence of government fiscal activity. The government will be injecting a quart or two of inflationary pressure into an economy that has a gallon of deflationary pressures.”