The latest “Misery Index” shows that Americans are more miserable than they’ve been in the past 28 years, economically speaking.
The monthly index, an unofficial measurement created by economist Arthur Okun back in the 1970s using the simple premise to total the inflation and unemployment rates, is now 62 percent higher than when President Barack Obama first took office in 2009.
The May index is at 12.7 (9.1 percent unemployment and 3.6 percent annualized inflation). That compares to an all-time high of 21.98 in June 1980, and a historical low of 2.97 in July 1953. In 2011, it has inched up every month since January’s reading of 10.63.
“The good news is that other measures suggest conditions aren't quite that bad and over the next 18 months the gloom should lift a little,” a chief U.S. economist wrote in a Misery analysis reported by CNBC. “The bad news is that households won't be in the mood to boost their spending significantly for several more years.”
An alternative gauge, put forth in 1999 by Robert Barro, encompasses a wider swath of misery, measuring employment against the so-called “natural rate,” and comparing inflation against the previous 10 years. It also looks at whether gross domestic product is below its “potential” and compares yields on the 10-year Treasury note against the yields of the previous 10 years.
Capital Economics’ Paul Dales says the Barro Index is indicating that while things aren't expected to get dramatically better, the level of misery is probably at a peak and should roll back over the next 18 months.
“The upshot is that Americans might not be quite as miserable as the Okun misery index appears to suggest,” Dales said. “And as inflation falls back, some of the gloom will lift.”
Of course, predictions of misery vary depending on who you ask. For instance, USA Todayreports that, according to Congressional Budget Office Director Douglas Elmendorf, much of the misery from the economic downturn still lies ahead for the American public.
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