Japan-Like Decade of Deflation A ‘Real Threat,' Experts Say

Pullback in consumer spending and reluctant lending by banks lay the foundation for a lost decade...

By some measures, deflation in United States is no longer a question of if, but for how long and how deep.

“In a lot of ways the economy is soft and there's absolute deflation in things like computers, food and energy,” said Barnaby Levin, managing director at HighTower Advisors LLC, which controls $16 billion in client assets.

Of course, any talk of deflation these days conjures up images of Japan, where businesses and consumers have been hoarding cash since the early 1990s while prices of goods and services have steadily declined.

“I think a Japan-like lost decade is a real threat here for all kinds of reasons,” said Mr. Levin. “After the 2008 market meltdown it scared the heck out of all of us and everybody is now pulling back their spending just like our grandparents did during the depression.”
 
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Japan-Like Decade of Deflation A ‘Real Threat,' Experts Say