Obviously if demand falls off a cliff by 30% there wll be a concern that deflation eventually becomes the price trend.
If you look at the following charts there’s no doubt why Fed Chairman Powell declared recently a new Fed focus: to raise inflation.
Last month the headline CPI was 0.6% for June.
July’s numbers will be released on Wednesday.
Further signs of deflation can have an immediate and lasting impact on stock prices.
Money & Credit
Overall Debt to Growth
Deflation (and too much inflation) causes price instability and can drive stocks down.