Services Inflation Dropping

Thanks to Justin Fox (writer of The Curious Capitalist) over at for pointing me to another blog writer Michael Mandel. He
scribes for Business Week in blog called Economic Unbound. On to my
point. I learned a lot just from considering this graphic and the
amount that Services play into the US economy.

As some of the comments said, this decline seems to coincide with the recent downturn in the employment status of the US. So do less people in the workforce reflect cheaper prices in services? Does the lack of spending mean the lack of service providers which in turn alters supply and demand?

The job numbers are down big time because of the construction industry. The manufacturing industry isn’t doing too well either (although this could reverse quickly due to the fall of the dollar). So these aren’t necessarily related to the Service inflation inflation drop. Also, the Service industry doesn’t really benefit from efficiencies by shrinking the number of people in the industry.

I think it is as simple as the lack of spending is forcing service providers to lower prices.


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