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All around the country, gasoline prices have been falling for weeks, down to an average of about $3 a gallon. Those lower prices are helping restrain inflation across the board.

On Wednesday, the Labor Department said its consumer price index barely inched up 0.1 percent last month. Over the past 12 months, the CPI has risen by 1.7 percent, roughly half of its historical average rate of increase.

That sounds great for consumers.

But some economists see possible trouble ahead. They worry that if energy prices were to keep sliding, the process could contribute to deflation — a brutal cycle of falling prices last seen in this country during the Great Depression of the 1930s.

Economists consider deflation to be the nightmare scenario. To understand why, imagine you own a factory. To make your product, you first must purchase parts and raw materials. You promise workers a certain wage. You borrow money to expand.

All of these transactions are based on the idea that you will be able to sell your goods at a particular price. But what if prices start falling?

Suddenly, you can't afford to repay your loan or live up to your contract with workers. You can't afford the parts that already are sitting on your inventory shelves. You have to start selling products at a loss, even as your competitors are slashing their prices.

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The downward pressure creates a vicious cycle that quickly leads to a broad plunge in the value of businesses, homes and other investments. While inflation can be painful and corrosive over time, deflation can crush an economy like a boulder out of the sky.

So where is the downward price pressure coming from today? Look overseas.

In both Europe and China, growth is weak. When consumers and companies in other countries start cutting their purchases of energy and goods, then global prices fall.

All over the world, central bankers and policymakers are trying to stimulate growth to keep prices from falling further. In this country, the Federal Reserve, which sets the direction of interest rates, wants to see the inflation rate hold steady at 2 percent.

"Given the deflationary winds blowing our way from Europe, the Fed is going to want to see CPI much higher" before boosting interest rates, Jonathan Lewis, the top investment officer at Samson Capital Advisors, said in an analysis.

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@officialdavet shared this image from Lake Orion, Mich., as part of our callout for photos of gas prices across the country. @officialdavet/Instagram hide caption

itoggle caption @officialdavet/Instagram

@officialdavet shared this image from Lake Orion, Mich., as part of our callout for photos of gas prices across the country.

@officialdavet/Instagram

For most Americans, here's what all of this means: Wages and prices are not moving much, and interest rates are remaining low. There may be a danger of deflation lurking just over the horizon, but so far, the drop in energy prices has been a boost for consumers.

Many are applauding the pleasures of low inflation. For example, they can buy a car with a cheap loan and then fill it up with cheap gas. That can help stimulate the economy in this country by increasing travel and consumer purchasing power.

"I'm on a very tight budget," said Macy Gould, a Lexington, Ky., resident who graduated from college in May. She was thrilled this past weekend when she was able to refuel for about $2.83 a gallon. "Spending less on gas is a real help to me," she said.

Earlier this year, a driving trip she wanted to make to St. Louis "just wasn't doable," she said. Now that the cost of gas is down so much, "I'm hoping I can get that back on the calendar."

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gas prices

Look at your paycheck.

Chances are good you won't see much more there than you did in the summer of 2008 — just before the financial crisis hit. Average private-sector earnings are $24.53 an hour now, unchanged from 2008, after adjusting for inflation.

So most likely, you haven't felt yourself moving up for years.

Now, that may be changing.

On Friday, the Labor Department said that its latest wage-and-salary index reading showed a 2.3 percent rise over the 12 months ended in September. And the Commerce Department's monthly measure of personal income also ticked up slightly.

"Even a minimal increase in wage growth is a sign of welcome improvement in the labor market," Lindsey Piegza, chief economist for Sterne Agee, wrote in her analysis.

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Many economists say bigger raises may be coming soon. "We expect this trend of rising wages will continue and provide the fuel for an economic expansion that could last several more years," Bernard Baumohl, chief economist for The Economic Outlooks Group, wrote in his assessment.

But even if a major raise isn't on your horizon, five factors will be helping stretch your current paycheck:

Cheap gasoline. In the summer of 2008, gas was $4 a gallon. On Friday, AAA said the national average, as of Saturday, will be below $3 for the first time in four years. The auto club says that downshift will save consumers $250 million a day, compared with earlier this summer when gas was $3.68.

A strong dollar. The U.S. dollar had more global purchasing power back in the early 2000s. Then its value fell compared with other currencies, reaching a bottom in 2011. Today, the dollar is strong again, allowing U.S. consumers to purchase imported goods and foods at lower prices. That change will help keep inflation low for Americans.

Low interest rates. Millions of homeowners have been able to get extraordinarily cheap mortgages. Just before the financial crisis, 30-year fixed mortgages were being offered at 6.5 percent. Today, rates are below 4 percent, allowing homeowners to lower their monthly payments.

Fierce retail competition. For shoppers, this should be a great holiday season because of cutthroat pricing. Wal-Mart told the Wall Street Journal it is testing a plan to match online prices. Best Buy and Target already are doing that, and Target is even offering free shipping on everything through Dec. 20. Analysts expect brutal price competition all around.

Cheaper food (eventually). Corn harvests were enormous this year, sending prices much lower. In 2008, a bushel cost around $8; now it's about half that. It takes a long while for low commodity prices to work their way through the food chain, but the huge corn harvest should help cut animal feed prices, which eventually could tone down the high beef prices that have hurt shoppers.

Of those five factors, perhaps none lifts consumers' spirits more than those tumbling gas prices.

"Consumers are experiencing 'sticker delight' as gas prices unexpectedly drop below $3 in much of the country," AAA chief executive Bob Darbelnet said. "Lower gas prices are a boon to the economy — just in time for holiday travel and shopping."

Jose Ferreira, a real estate developer filling his tank at a Boston gas station, did indeed express delight with the price decline. "People struggle to survive, you know. If you can save some money, it's great for everybody," he said.

And while cheap gas can brighten your near-term financial situation, the stock market's surge can help with the long term. On Friday, the Dow Jones industrial average closed at 17,390, up 195, to hit a record high. On the same date six years ago during the financial crisis, it was at 9,325.

The Associated Press contributed to this report.

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consumers

A compelling Facebook photo shows an old man wearing spectacles and a shawl. He's standing in front of a cracked mud wall. Most of his face is filled by a huge, dusty-looking white beard. He looks tired and sad.

Only the man's family and friends would know that he is not, in fact, a weather-beaten mountain tribesman, but the vice chancellor of one of the most distinguished universities in Pakistan.

This picture of professor Ajmal Khan, posted on the Web by his supporters, was printed by a newspaper when he was freed, after spending four years as a hostage of the Taliban.

i i

Ajmal Khan, vice chancellor of Islamia College University, talks with journalists after his release from Taliban captivity in August. Arshad Arbab/EPA /Landov hide caption

itoggle caption Arshad Arbab/EPA /Landov

Ajmal Khan, vice chancellor of Islamia College University, talks with journalists after his release from Taliban captivity in August.

Arshad Arbab/EPA /Landov

Now, two months later, the vice chancellor is back at work, running the Islamia College University in the city of Peshawar. His immaculate appearance shows no hint of his ordeal; his beard is now trimmed. As he tells the story of his captivity, he is twinkly-eyed, soft-spoken and engaging.

Hostages who are fortunate enough to be released tend to return home with compelling stories. Many of these describe horrifying degradation and abuse.

Khan suffered fear, uncertainty and the loss of freedom, but he says his captors treated him with respect and did not physically harm him.

The Taliban has a long record of attacking educational establishments. Yet Khan says the militants allowed him to run an impromptu school for a while — though his pupils were almost all boys.

Khan was abducted in September 2010 as he was being driven to work. He had just left his house when a car pulled up in front. A man got out, walked up to Khan's vehicle, tapped on his driver's window and pulled out a pistol.

Very quickly, militants surrounded the car, brandishing pistols. "By then, I knew it was something terrible," he says.

The militants bundled Khan's driver into the backseat next to Khan. They climbed in, pulled burqas over the heads of their new captives, and began driving.

"As they sat with us, they injected something into our shoulders. I just felt the prick," he recalls. Drugged, he and his driver were asleep in less than 10 minutes.

When Khan awoke, he was in the mountains in the tribal belt bordering Afghanistan, an area that was, for years, a sanctuary for Islamist militants.

'They Knew Almost Everything Regarding Me'

Khan says the Taliban spent more than a month carefully planning his abduction. He thinks they chose him because of his ties with one of their enemies — the political party then running the provincial government in northwest Pakistan. Khan, father of five daughters, says the militants seemed to know all about him.

"They knew almost everything regarding me," he says. "They had a complete history — my family, daughters, the number of children I had."

"It was very difficult at first, very difficult," Khan adds. He spent much time in prayer.

In the years that followed, the vice chancellor was moved from hideout to hideout at least 20 times (His fellow hostage — the driver — was released in 2012). Khan remembers the constant sound of U.S. drones — and the worry, too, that he would be hit by a missile targeting his abductors.

In some places, he was locked in a room in a house. In more remote mountain areas, he was allowed out, under guard. On one occasion, in the hills of Waziristan, he came across two small boys herding sheep and goats.

"I asked them, 'Do you go to school?' " Khan says. "Their reply was, 'Yes, we used to. But now ... schools are there, but there are no teachers because we are in a war!' "

The boys told him they still had their school books at home. Khan invited them to come the following day to the house in which he was imprisoned. He would teach them, he said.

"They were very happy! You could see the light in their eyes," Khan says.

Word of the vice chancellor's tiny school quickly spread around the mountains. More and more boys, sons of local herdsmen, showed up, until he had more than 30 pupils. Khan says one little girl came for a couple of days, asking for religious education, but soon stopped attending.

Lessons Of Math, Science And Captivity

He taught the boys mainstream subjects from the government curriculum: math, science, Urdu, Islamic studies, even English.

Khan says the kids were aware he was a hostage. One boy, about 10, was particularly unhappy about Khan's captivity.

"And he says, 'This is not according to Islam. This is something against Islam, and you are doing something very wrong,' " he says. "A brave little boy."

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Khan says he sometimes asks his pupils whether, if he was ever free to go home to Peshawar, they'd like him to enroll them in school there. The kids' replies reveal much about the benighted world into which they were born.

"Some of them would say, 'Yes, we would come,' and others would say, 'Will the government be happy with us?' " Khan says. "They would say, 'I hope they don't put us in jails.' "

The vice chancellor's school finally closed when news began to circulate that the Pakistani military was about to move into the area. The Taliban moved Khan to an even more remote mountain hideout.

Khan says throughout his captivity, his Taliban guards were regularly switched. Yet he was able to observe and question these young, uneducated Pashtun men. He says their motivation is primarily religious. "They thought this is what God asked," he says.

For most of his captivity, Khan was held by Taliban from the Mehsud tribe. He was with them when a feud broke out, and wound up in the custody of a splinter group that decided to let him go. He doesn't think any ransom was paid for his release.

Pakistan's armed forces are now in the fifth month of an offensive focusing on the same areas of the tribal belt in which Khan was held hostage. They claim to have killed more than 1,100 militants, and to have destroyed many hideouts and arms caches. There's a growing consensus in Pakistan that the Taliban is on the run.

Khan cautions against drawing too many conclusions. He doesn't think the militants' war with the state is over, and points out they could easily regroup.

He argues the long-term answer to Islamist militancy is for Pakistan's government to provide a counter-narrative to its ideology. His tiny, temporary school suggests that this is an idea that the children of Pakistan's mountains are happy to embrace.

"The state is not doing its bit," Khan says, "Education is the only solution."

A compelling Facebook photo shows an old man wearing spectacles and a shawl. He's standing in front of a cracked mud wall. Most of his face is filled by a huge, dusty-looking white beard. He looks tired and sad.

Only the man's family and friends would know that he is not, in fact, a weather-beaten mountain tribesman, but the vice chancellor of one of the most distinguished universities in Pakistan.

This picture of professor Ajmal Khan, posted on the Web by his supporters, was printed by a newspaper when he was freed, after spending four years as a hostage of the Taliban.

i i

Ajmal Khan, vice chancellor of Islamia College University, talks with journalists after his release from Taliban captivity in August. Arshad Arbab/EPA /Landov hide caption

itoggle caption Arshad Arbab/EPA /Landov

Ajmal Khan, vice chancellor of Islamia College University, talks with journalists after his release from Taliban captivity in August.

Arshad Arbab/EPA /Landov

Now, two months later, the vice chancellor is back at work, running the Islamia College University in the city of Peshawar. His immaculate appearance shows no hint of his ordeal; his beard is now trimmed. As he tells the story of his captivity, he is twinkly-eyed, soft-spoken and engaging.

Hostages who are fortunate enough to be released tend to return home with compelling stories. Many of these describe horrifying degradation and abuse.

Khan suffered fear, uncertainty and the loss of freedom, but he says his captors treated him with respect and did not physically harm him.

The Taliban has a long record of attacking educational establishments. Yet Khan says the militants allowed him to run an impromptu school for a while — though his pupils were almost all boys.

Khan was abducted in September 2010 as he was being driven to work. He had just left his house when a car pulled up in front. A man got out, walked up to Khan's vehicle, tapped on his driver's window and pulled out a pistol.

Very quickly, militants surrounded the car, brandishing pistols. "By then, I knew it was something terrible," he says.

The militants bundled Khan's driver into the backseat next to Khan. They climbed in, pulled burqas over the heads of their new captives, and began driving.

"As they sat with us, they injected something into our shoulders. I just felt the prick," he recalls. Drugged, he and his driver were asleep in less than 10 minutes.

When Khan awoke, he was in the mountains in the tribal belt bordering Afghanistan, an area that was, for years, a sanctuary for Islamist militants.

'They Knew Almost Everything Regarding Me'

Khan says the Taliban spent more than a month carefully planning his abduction. He thinks they chose him because of his ties with one of their enemies — the political party then running the provincial government in northwest Pakistan. Khan, father of five daughters, says the militants seemed to know all about him.

"They knew almost everything regarding me," he says. "They had a complete history — my family, daughters, the number of children I had."

"It was very difficult at first, very difficult," Khan adds. He spent much time in prayer.

In the years that followed, the vice chancellor was moved from hideout to hideout at least 20 times (His fellow hostage — the driver — was released in 2012). Khan remembers the constant sound of U.S. drones — and the worry, too, that he would be hit by a missile targeting his abductors.

In some places, he was locked in a room in a house. In more remote mountain areas, he was allowed out, under guard. On one occasion, in the hills of Waziristan, he came across two small boys herding sheep and goats.

"I asked them, 'Do you go to school?' " Khan says. "Their reply was, 'Yes, we used to. But now ... schools are there, but there are no teachers because we are in a war!' "

The boys told him they still had their school books at home. Khan invited them to come the following day to the house in which he was imprisoned. He would teach them, he said.

"They were very happy! You could see the light in their eyes," Khan says.

Word of the vice chancellor's tiny school quickly spread around the mountains. More and more boys, sons of local herdsmen, showed up, until he had more than 30 pupils. Khan says one little girl came for a couple of days, asking for religious education, but soon stopped attending.

Lessons Of Math, Science And Captivity

He taught the boys mainstream subjects from the government curriculum: math, science, Urdu, Islamic studies, even English.

Khan says the kids were aware he was a hostage. One boy, about 10, was particularly unhappy about Khan's captivity.

"And he says, 'This is not according to Islam. This is something against Islam, and you are doing something very wrong,' " he says. "A brave little boy."

The Two-Way

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Goats and Soda

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The Two-Way

Afghan Taliban Release U.S. Soldier Captured In 2009

Khan says he sometimes asks his pupils whether, if he was ever free to go home to Peshawar, they'd like him to enroll them in school there. The kids' replies reveal much about the benighted world into which they were born.

"Some of them would say, 'Yes, we would come,' and others would say, 'Will the government be happy with us?' " Khan says. "They would say, 'I hope they don't put us in jails.' "

The vice chancellor's school finally closed when news began to circulate that the Pakistani military was about to move into the area. The Taliban moved Khan to an even more remote mountain hideout.

Khan says throughout his captivity, his Taliban guards were regularly switched. Yet he was able to observe and question these young, uneducated Pashtun men. He says their motivation is primarily religious. "They thought this is what God asked," he says.

For most of his captivity, Khan was held by Taliban from the Mehsud tribe. He was with them when a feud broke out, and wound up in the custody of a splinter group that decided to let him go. He doesn't think any ransom was paid for his release.

Pakistan's armed forces are now in the fifth month of an offensive focusing on the same areas of the tribal belt in which Khan was held hostage. They claim to have killed more than 1,100 militants, and to have destroyed many hideouts and arms caches. There's a growing consensus in Pakistan that the Taliban is on the run.

Khan cautions against drawing too many conclusions. He doesn't think the militants' war with the state is over, and points out they could easily regroup.

He argues the long-term answer to Islamist militancy is for Pakistan's government to provide a counter-narrative to its ideology. His tiny, temporary school suggests that this is an idea that the children of Pakistan's mountains are happy to embrace.

"The state is not doing its bit," Khan says, "Education is the only solution."