• @hark@lemmy.world
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    12 months ago

    You’ve got that backwards. People get laid off, can’t buy things, then prices go down because demand is lower.

    • JWBananas
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      12 months ago

      It’s not just consumer spending that influences inflation,/deflation but also institutional spending. The consumer price index is a lagging indicator. Decreases in institutional spending precede unemployment and the eventual reduced demand for consumer goods and services. And increases in the fed rate (and/or other forces which cause the cost of borrowing money for institutions/investors to rise) generally precede that.