Falling prices sounds fun, but not to some

WASHINGTON, Nov. 21 (UPI) -- The surprise development of falling prices has experts worried that such a hiccup could greatly stall the U.S. economy, economists said.

In a prolonged period of falling prices, consumers hold off on purchases.

"Consumers know if they wait longer, the chances of them not having a good selection is fairly small and the chances are that the prices will be lower," economist Charles McMillion, at MBG Information Services told The Washington Post.

"So why buy today? This is exactly why economists are always scared to death of deflation," McMillion said.

Ed Yardeni at Yardeni Research said deflation would prompt the U.S. Federal Reserve to cut interest rates to push the economy forward. "He (Fed Chairman Ben Bernanke) said he would do this under certain dire circumstances, which are rapidly unfolding," Yardeni said.

Pricing bellwether crude oil fell to below $50 per barrel in New York this week. The consumer price index also fell 1 percent in October, the sharpest monthly drop in 61 years.

Economists say deflation also stops companies from borrowing. Even with interest rates at zero, companies are loath to borrow as prices -- their return on investments -- are falling, the Post said.