I always hear that this is bad. This myth has come from our observances of the American depressions. (1921 and 1930) Noticing a trend of severe (not mild) price deflation, the case was then somehow made that steady and mild price deflation is bad for an economy.
One example that is brought up is the computer industry. These machines provide more functionality and more computing power for less and less money.
When this example is brought up, some mention that if there is a general price deflation, people and businesses will hoard money forever. Why would they hoard money forever? Because the money will appreciate in value and they can buy more in the future, so they withhold buying today. No I ask: Why does this have to be the case for the economy in general, but not for a specific industry? We see that the price deflation in computers far outstrips the general price increases, so on net we have general price deflation in this industry. The "hoarding for forever" argument does not hold for this industry as we see that people make purchases. And what is the economy made of? Industries. So if price deflation doesn't keep people from buying computers, why would it keep them from buying other goods in other industries? Put simply: If your money now can be held to buy more computer power/functionality later, but you buy it now, why is it that one would hold off indefinitely for other goods and industries?
Also, people buy food rather than starve.
I'll later bring up the milder form of the argument and address that as well later. The "problem" that consumer spending is less in a price-deflationary economy.