I'm not an economist, so I don't know what they will call a situation where, between Congress and the Fed, the government issues 4T in stimulus to a locked down country to keep the market up and businesses alive. Our economy is definitely in stagnation for the foreseeable future and there hasn't been a whiff of inflation for years. Some talk about deflation as goods become cheaper, but also hard to see much of that if businesses have government money and consumers have some government money - basically all the ingredients for inflation without any need or really ability to spend... Guess it all depends how long it takes to work our way back to normal, and what normal ends up being.
Maybe we should move this to a separate thread because not directly relevant to the 4% rule, but it is a fascinating set of questions.
Without saying this WILL happen, I could make a case for the CARES act actually having a (short term) deflationary impact rather than inflationary.
Right now consumer demand has dropped dramatically for two reasons. People have lost their jobs and people with jobs (still the majority of the population) are saving rather than spending because they don't know what the future will hold. CARES helped fewer people lose their jobs, but that has less impact on consumer demand because even people who keep their jobs are mostly saving cash, except for vital expenses (rent/mortgage, food).
At the same time, the CARES act allows a lot of businesses that would otherwise go out of business stay open, and it does this by subsidizing a large proportion of their costs (labor). In the absence of CARES these businesses would have gone under, reducing supply for a lot of the things people spend their money on other than rent/mortgage and food. With CARES in place these businesses stay alive, and -- because their operating costs are already covered for the next several months, allowing them to turn a profit from sales a much lower prices than usual -- will continue to cut their prices to compete for the small number of discretionary consumer dollars still floating around in the economy.
TL;DR By staving off bankruptcy driven decreases in supply, CARES
may prolong the imbalance between supply and demand for nonessential goods and services and drive down market prices.
Not saying this
will happen, just that there is a plausible argument* which could be made for it.
*At least it seems plausible to me. Please feel free to poke holes it in.