William Wolman, chief economist of Business Week, was the Dec. 22 guest of BW Online to discuss the investment outlook for 1997 -- the subject of the Dec. 30 yearend double issue of the magazine.
Here's a sample from the transcript:
JackBW: UP60 sent us this question in advance -- for which, thanks, UP60.
Question: Is there a propensity for deflation in this New Economy? The consensus at present seems to be for a continuation of the low level of inflation we have been seeing for many years now.
BillWolman: Amen, UP60. I certainly agree with that -- agree that the level of inflation will continue to be low. Moreover, I'd go further: If there is a risk on the price front, it is of deflation, not of inflation. There's a lot of pressure on the prices of all goods, partly because of a modest slowdown in the developing world, particularly in Asia, and this slowdown is a great incentive for the Chinese, the Koreans, and other Asian countries, including Japan, to cut prices. Look what's happened to the prices of Japanese cars in U.S. markets over the past few months. They've been coming down, putting pressure on Detroit, and increasing Japan's market share. That could be a template for many other areas.
