Deflation

Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. Usually associated with a contraction in the supply of money and credit, it can also be driven by an increase in productivity and the abundance of goods and services, by a decrease in total or aggregate demand, or by a decrease in the supply of money and credit. As it often signals an impending recession, what comes after are declining wages, job losses, and big hits to most investment portfolios.