For generations, the United States’ economy operated on a 60-year inflation cycle. Inflation and interest rates would steadily rise for decades, and then somewhere around the 30-year market the tables would turn, and the economy would respond with a similarly steady run of deflation.
It wasn’t a set your watch to it 30 years on and 30 more off situation, but Donald Broughton with Broughton Capital says the pattern repeated itself enough in history for economists to view it as a reliable trait of the American economy.
That is, until now.
Now seven years past the likely end of the most recent deflation cycle with no sign of change in sight, Broughton believes the U.S. economy has kicked one of its most common features.
Inflation will invariably come again, but thanks to technology, Broughton says deflation may be standard operating procedure for the economy moving forward.
Presenting Friday at the Used Truck Association (UTA) annual convention in Las Vegas, Broughton used Moore’s Law as a clear example of just how impactful technology can be on inflation rates. According to the concept, developed by Gordon Moore in 1965, the number of transistors in a circuit double every two years while the price of said technology is halved. Broughton says similar technology-forced changes are happening in other industries (manufacturing, agricultural, trucking, etc.) as well, and he believes those innovations have stunted the inflationary cycle.
Fortunately for trucking, those changes haven’t weakened the economy. On the contrary, Broughton believes the U.S. economy is poised to keep growing in 2018.
