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We Are Still Miserable

It is easy to measure misery.  The “misery index” is calculated by adding the unemployment rate to the annual change in inflation.  That number tells us just how miserable consumers are.

In July, the misery index had hit a 28-year high: with a jobless rate of 9.1% and inflation at 3.6%, our ‘misery’ measured 12.7.  Now the measure has ticked up even higher: 9.1% unemployment + 3.9% inflation= 13.  Inflation at 3.9% is the fastest pace we have seen in three years.  Combine that with elevated unemployment and we’ve got reasons to be miserable.  All told, the index has risen over two points so far this year.

On the upside, it’s been worse.  At the end of the Carter administration, the unemployment rate was 7.5%, and inflation was 12.7%…so the misery index peaked at 20.3.  The economy was stagnating and prices were soaring. 

But then the economy started improving in 1984.  Today the index is a clear indication of just how weak the economic recovery has been…the index has been above 10 since November 2009.

But as I wrote in July, the problem is that 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.


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