Combined with slumping demand, the rebound in supply may continue to depress prices.
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The report cited the previously disclosed decision of Marathon Ashland to withhold some of its cleaner burning gasoline from the market "so as not to depress prices" in the spring of 2000.
Thus so long as China's wages and the prices of its goods remain well below those in rich countries (see right-hand chart, above), its increasing penetration of world markets will continue to depress prices for many years.
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That is because higher interest rates are likely further to depress house prices, which had risen to giddy heights before suffering a reverse this year.
One optimistic note for the near term, though: Tax selling, which tends to depress stock prices, will end in December and thus lay the groundwork for a January effect (when investors gobble up the marked-down stocks, leading to a mini-rally).
Central banks from China to Canada are holding far less of their foreign reserves in gold bullion these days, which means they have less to sell into the market and thereby depress prices.
That, in turn, will depress share prices, which will make it harder to achieve adequate investment returns.
On the other hand, the Obama administration currently plans to raise dividend and capital gains taxes, which will depress stock prices, making for a negative wealth effect.
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It has taken on added importance recently because of fears that the decline in home prices will spill over and depress consumer spending, leading to major pressure on growth in the United States and countries that rely on American consumers to buy their exports.
Gasoline prices could spike high enough this summer to significantly rattle consumer confidence and further depress an already sluggish U.S. home sales market.
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As expectations of deflation become entrenched 35% of Japanese expect prices to be the same or lower in five years' time they will continue to depress consumption.
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