If inflation is lower than it has ever been before at this stage of the business cycle, then the Cassandras say that is bad because we must be on the brink of wage-push inflation. If our productive capacity is growing, they warn that it is not growing fast enough, and we will end up pushing capacity utilization to the point where price increases naturally follow. What connects these warnings is fear of inflation. A new round of 1970s-style inflation would indeed be devastating. But the facts all point the other way.
Inflationary pressures are now nonexistent anywhere along the chain of production.
Believing their own eyes. The practical experience of most business leaders makes them discount concerns that inflation will soon recur. Through years of restructuring and expense suppression, they saw their companies become undeniably more efficient. They invested heavily in new technology and went through painful cycles of managerial re-engineering. Now, their own profits have been rising, even as competition has forced them to hold down prices.