This is particularly true as deflationary pressure intensifies which in turn drives business caution and amplifies the fundamental problems pervading commodity markets.
The counter argument would be that lower oil prices, being largely supply driven, are acting as a tax cut and will stimulate domestic demand, offsetting any potential deflationary pressure.
The resulting lack of aggregate demand leads to deflationary pressure, or drag, on the economy, essentially due to lack of state spending or to excess taxation.
