Economist: concerned 'about prices actually declining'

Hand sticks pin into balloon with $100 bill.

JEREMY HOBSON: And that's where we'll start this morning with Richard Dekaser, economist with the Parthenon Group. He's with us live from Boston. Good morning, Richard.

RICHARD DEKASER: Good morning.

HOBSON: Well, 0.04 percent. Well, that means, I guess, my widget company is paying $0.04 more on a $10 purchase? Doesn't seem like a very big deal.

DEKASER: Well, it's not. The problem is we've seen it for a couple months in a row -- it doesn't make a trend exactly, yet, but it certainly does through a little water on concerns about prices actually declining. This is very modest inflation and fortunately, it hasn't shown up yet on the retail level on any meaningful way. So, it's catching our attention, but not ringing any alarm bells.

HOBSON: And when you say deflation -- does that mean that that concern is off the table for now?

DEKASER: I wouldn't say it's off the table, I'll say it's been diminished. Usually, high unemployment, we've got nine plus unemployment today is the sort of thing that insurers -- it runs the risk of deflation. So as long as we're running with this tremendous slack in the labor market, the risk is out there. But, it's not acute at this time.

HOBSON: And what about stagflation, Richard? A stagnating economy and some inflation -- is that what we're experiencing?

DEKASER: Not yet. That's the worst of both worlds and there is concern. Critics of the Federal Reserve really are pushing this argument -- worried that we'll have an economy that's soft. But all of this money that the Federal Reserve has been pushing in the economy is going to show up as inflation. We get slow growth, high inflation. Again, the markets don't see that. If you look at indicators of inflation, they're basically telling us that the next 10 years will look like the last 10 years -- 2.5 percent, same old, same old.

HOBSON: Richard Dekaser, economist with the Parthenon Group, thanks as always.

DEKASER: My pleasure.

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