Tuesday, September 30, 2014

At 0.3 percent, will low inflation lead us into another recession?

Jack Ewing of the New York Times has a piece on the low rate of inflation in the eurozone, which stood at just 0.3 percent in September. This low rate of inflation indicates, according to Mr. Ewing, that leading economists fear that consumers will halt their spending and lead the already fragile eurozone into another recession. Deflation, i.e. falling prices, will result in lower growth rates and higher unemployment.

With these fears in mind, will it be possible for the new European Commission to pursue an economic strategy that will aggressively make a dent in the disastrous unemployment rate of nearly 25 percent in the eurozone? Hopefully. Otherwise, things may just get worse before they get better.

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