After years of worrying about inflation, some economists fear the opposite could soon happen: deflation, an extended period of falling prices that indicates the economy is in a backward spiral, it was reported on Sunday.

As the recession deepens, more and more Americans have less to spend on food, clothes, gasoline, cars and shelter, the Los Angeles Times said.

Despite discounts at the store and the car dealership, a lowering of rents and a near-historic drop in the price of houses, people just aren't buying much, the paper said.

The net worth of millions of Americans has also shrunk, it noted.

"This is the kind of downward spiral that worries policymakers," the paper said.

Economists and politicians alike are divided about what to do. Taken as a whole, prices in the U.S. economy increased last year, but only a tiny bit. Inflation registered only 0.1 percent in 2008,the smallest increase in prices since 1954, according to the paper.

Consumer spending declined in December for a record sixth straight month and rose 3.6 percent for the year, its lowest annual gain since 1961. The economy lost 3.6 million jobs since the recession started in December 2007, said the paper.

"Deflation will become more pervasive as we make our way through the year," Mark Zandi, chief economist at Moody's Economy.com., was quoted as saying. "The downturn is intensifying, and businesses are under increasing pressure to cut prices to maintain some sales."

The fear about this recession rests on the severity of the real estate crash and credit crunch, which translates into pain for any homeowner who sank savings into a house only to see property values plummet, said the paper.

There may even be signs that -- as they did during and after the Great Depression of the 1930s -- consumers will change the way they manage money, saving more and spending considerably less, the paper said.

"Although few would argue that this is not a more conservative and ultimately safer way for American families to live, it could push deflationary trends in the economy even further," the paper concluded.

(Xinhua News Agency February 9, 2009)