Here are 3 hand-picked paragraphs from the 1st in a series of 5 articles by A. Gary Shilling, Bloomberg (linking does not mean we necessarily fully concur with Mr. Shilling's analysis; for the most part, however, we do):
Deleveraging: In a normal economy, chronic deflation would already be well established. Our global economy, however, is dominated by deleveraging in the private sector and financial institutions, and is highly deflationary. These actions are overpowering the effects of stimulus programs since 2007. Even with all the government measures, the U.K. is in a recession, as is the euro area. China’s gross-domestic-product growth has slowed considerably and the U.S. reported a mere 0.1 percent annual increase in real GDP for the fourth quarter of 2012.
In the years ahead, I expect the half-percentage-point annual drop in the savings rate to be replaced by a one- percentage-point annual gain. This would slice 1.5 percentage points off consumer-spending gains as well as GDP growth, after multiplier effects are accounted for. That alone would drop aggregate growth to 2.2 percent from the 3.7 percent annual increases in the period from 1982 to 2000.
Other Deflationary Forces: Fertility rates are below the replacement level of 2.1 in most industrialized countries, and populations around the world are aging. As a result, the ratio of working-age people to total population will shrink, retarding economic growth. Substandard education systems, especially in the U.S., restrain productivity growth, employment gains and economic advances. Instead of investments in education, research and productivity-enhancing capital equipment, the emphasis has been on consumer spending, housing and financial assets, which do little to enhance productivity and can curtail growth. [Read the whole article (recommended):] Why Global Economies Face an Age of Deflation - Bloomberg
Part 2 is here: Stimulus Spending Only Delays Chronic Deflation