Consumer confidence was waning. But today, according to some measures, consumers aren’t just unconfident. They’re miserable.
How do you calculate misery? Misery = unemployment + inflation.
Based on that math, consumer misery has hit a 28-year high. Today’s numbers: 9.1% unemployment + 3.6% inflation= 12.7% misery. The misery index peaked in 1980 at the end of the Carter administration, with the economy stagnating and inflation rising. The numbers back then: 7.5% unemployment + 12.7% inflation= 20.3% misery.
But reaching a 28-year high isn’t the real problem. The problem is that 12.7% isn’t really how miserable we are. Taking a more inclusive measure of unemployment, and measuring inflation without assuming that consumers have changed their spending patterns, we have a very different read on our misery: 22.3% unemployment + 11.2% inflation= 33.5% misery, according to John Williams of ShadowStats.
And 33.5% is a lot more miserable than we were at the peak in 1980.
But the misery index is very subjective thing, and varies from one consumer to the next. A consumer on fixed income may be affected by inflation more than others. And a consumer without a job is 100% unemployed. Do that math.
And the misery index isn’t the only read on how we are feeling. The Conference Board’s consumer confidence index declined substantially this month, again. Expectations dropped, and so did the assessment of current conditions.
And economic optimism now stands at its lowest point since July 2008 (just before the financial crisis), according to the Pew Research Center.
The bottom line: consumers, and their spending, account for over 70% of the economy. And consumers are, by any estimation, uncertain and unhappy.