How are falling gas prices and a drop in consumer products going to hurt the economy more?

I am not an economist:

People pay their bills with the money they earn. It’s rare for someone’s salary to go down (although, I’d rather keep my job and make less, than lose my job). If the consumer prices go down, companies are making less money, and are more likely to lay people off. Lower prices are (frequently) a loss of margin, and not so much a decrease in raw materials or labor cost. The less money the big bad corporations make, the less money the rank-and-file employees make, and the less money they have to spend on consumer items.

Or that’s what I understand. Anyone who knows what they’re talking about care to chime in? I’m sort of looking forward to a little deflation so the value of my savings account goes up.

I also hear they’re going to shoot straight back up again after winter.

One problem is deflation. This has been covered on the news for the last few cycles.

I will relate with how this is affecting me right now. My TV is about to die and I want to replace it with a fancy flat panel one. I was ready to buy one the other day and decided against it since I am pretty sure that they are going to get cheaper in the next few weeks. That is a bad cycle for an economy to get into. Sure, I have a bit more money to spend but I don’t want to spend it becuase I think I can get more bang for my buck in a month.

JP that is what I learned in economics. That people are less willing to purchase items when they think the price is about to go down and the same with houses. What about groceries? We have to purchase those. Are they part of “consumer products” or are they seperate?

@jessturtle23: Food is a non-durable good. A TV, car, or house are durable. Generally, deflation hits the durable goods more. People still need to eat but they don’t really need the new car. Unfortunately it becomes a cycle that is hard to break out of. And then you toss in fears of people losing their jobs and it becomes a perfect storm of of economic clusterfuckedness*.

*I’m not sure if that is a word, but it should be.