The Misery Index has been rising since 1998, due mostly to rising unemployment, but also due to rising inflation. It has now reached the levels that prevailed in the early years of the Carter presidency. The top chart recaps the Misery Index, while the bottom chart shows its components.
As both unemployment and inflation could fall from here, I am not concerned about this index.
ReplyDeleteThe real problems are deflation and weak economic growth.
Benjamin, you may not be interested in the Misery Index, but (to paraphrase Trotsky), the Misery Index is interested in you.
ReplyDeleteIts utility lies in its political application. When the index climbs to levels of those in the Carter administration, the incumbent has a huge problem. This is obvious to anyone who's been paying attention since early last year, but it helps make the point.
As Scott and most commenters point out day after day to you, deflation ain't happening. The dollar is weak, core inflation is on the rise. But I do applaud you for not mentioning Japan in your post!
I suppose you could also say it's about where it was at the beginning of the Ford presidency. With all due respect, we're a long way from the miserable '70s. Things are bad for a lot of people, but the mid to late '70s were a lot worse for a lot more people than they are today.
ReplyDeleteBill-
ReplyDeleteHaving lived through the awful 1970s, I agree with you (and remember ever-rising urban crime and the endless war in Vietnam?).
Jon S-
Hey, Obama may get crushed, It means little to me (although it might be an economic positive). We would still have problems of weak demand, too-low inflation rates and dead real estate.
The core rate now is 2 percent y-o-y. Many very conservative economists have contended that the CPI overstates inflation, due to rapidly evolving and improving goods and services. Perhaps by one percent.
If so, we are running core at 1 percent now. That helps to explain TIPS rates, or dead real estate.
I heartily recommend you bone up on Market Monetarism, a movement by conservative monetarists to target nominal GDP growth through a rules-based approach.
Also, remember that George Gilder warned that conservatives too often become fixated on inflation, when the real goals are economic growth, prosperity, innovation and commercial freedom.
It may be that if Romney can edge out Obama, we will see conservatives embrace a more-aggressive Fed.
BTW, Japan!
ReplyDeleteSay hello to the new normal, fellas. nothing will pass congress that might change it.
ReplyDeleteYou all (mostly) talk about the economy like it's a stubborn problem that everybody wants fixed.
Time to understand things are the way they are by design. Corporate profits are at an all-time high. Corporate taxes have long been heading down as a percentage of overall tax revenue.
The Supreme Court's Citizens United reaffirmed money is speech (too bad speech isn't money).
Money is protected, anonymous, and becoming more powerful - by design.
For the rest of us, we need to better appreciate coupons, 10 for 10 sales, blue skies, and songbirds.
Welcome back Carter!
ReplyDelete