Mark-to-market accounting standards exacerbated selling pressures during the period of deflating house prices as banks were forced to recognize valuation losses in their balance sheets. The fragmented supervision in the United States led to lack of regulation over segments of the financial system.
The year-on-year rate of change in the CPI (all items less fresh food) has remained at around 0.5 percent. The relatively weak price developments compared to the economic expansion and tight labor market conditions are attributed to the mindset and behavior based on the assumption that wages and prices will not increase easily.