The dark side of low prices


You'd think lower prices would be good, but there's bad news in that, too. Some say we risk getting the economy stuck in a deflationary rut.

Michael Smith at Houston's STA Wealth Management says consumers are losing confidence.

"GDP is comprised of 70% consumer spending; now with the consumer uncertain about the future they become savers, so they become a lot more cautious with their purchases."

Unfortunately, Smith says the best thing you can do is not spend.

"Save, plan and be frugal and that's the best thing I can tell any individual to do; make sure your budget, in case of emergencies is instead of six months, make it a year. But make sure you're saving and not wasting it on spending."

The Fed says it's doing what it can to head off deflation. Smith says the economy might not roar back to life immediately.

"I know everybody wants to think it'll be quick and easy to come back but I've been telling friends and family cut where you can and plan for this to be longer; I think this thing can linger for a while."

But KTRH Moneyman Pat Shinn says he's optimistic the economy will roar back to life quickly, especially if there's a Covid-19 vaccine by the end of the year.


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