Oil price declines do not exacerbate the deflation problem

I've read a few times lately that oil price declines are raising fears that deflation may be a big problem for us. This is a misreading of the nature of the deflation problem. Deflation itself is not the problem; rather it is a symptom of insufficient demand in an economy that is running below potential. If the price of a major input declines, then of course inflation will also decrease, but this is not a sign that the economy is running slower versus its maximum potential, and in fact the decline of input prices likely stimulates the economy as activity which might not have been viable becomes more attractive given the reduced costs.

The better measure for the economy's production versus its capacity would be inflation ex-oil+food, or even better yet, wage growth.