July 26, 2011 (Shirley Allen)
The U.S. Misery Index increased from 12.67 in May to 12.76 in June, with the poor unemployment numbers observed in June being the major contributing factor to the increase. Unemployment increased from 9.1 percent in May to 9.2 percent in June, while inflation remained at 3.6 percent. A year ago the Misery Index was 10.74.
The Misery Index tends to reappear during times of economic hardship and is most associated with the economic times during the Jimmy Carter Administration. The Carter Administration has the dubious honor of claiming the highest Misery Index reading of almost 22 percent in June of 1980.
Ironically, during his run for the Presidency in the summer of 1976 when the Misery Index was at 13.57, Carter stated that no man responsible for a country with a Misery Index that high had the right to even ask to be President. Those words would come back to haunt him in 1980.
After the economic recovery in the 1980’s, the Index lived in relative obscurity, with the exception of a brief spike in the last year of the first Bush Administration, then falling into the single digits in the early 1990’s before making a reappearance into the double digits in 2008.
The Misery Index was created by Economist Arthur Okun and was launched in the 1970s in an attempt to gauge economic hardship by adding the unemployment rate to the inflation as a measurement of American’s misery.
The index is at a 28 year high and doesn’t look to get better anytime soon. Although the Federal Reserve predicts the inflation rate in the second half of 2011 should decrease due to easing oil prices, July has seen the return of several mass lay-offs and first time unemployment claims have been over 400,000 for 15 weeks in a row.
Tags: Misery Index, unemployment, inflation, economic hardship, Jimmy Carter, Ronald Reagan, George Bush, Federal Reserve