What is the Misery Index?

What is the Misery Index? October 23, 2011

The Misery Index is a statistic about the economy that takes two factors into consideration: the unemployment rate and inflation rate.  With simple math, you add these two rates together to come up with the misery index.  As the name suggests, a high rate of unemployment and inflation brings misery to an economy and the higher these two statistics, the greater the misery the country will be in.

The new media absolutely loves when they can use headlines like “Misery Index reaches 28 year high” which is probably why you vaguely remember hearing about this term in the last few weeks.  Over the last 28 years, the misery index had an average of 9.07%, slightly lower than its total average of 9.44% looking at data going back to 1948.  This helps to put things into perspective when you hear that the misery index reached 12.7%, which is calculated by adding the unemployment rate of 9.1% and inflation rate of 3.6%.

But why say ’28 year high’?  Aah, that’s because the news enjoys using data that causes people to look twice.  Yes, it’s shocking to see the figure so high, but rewind 30 years, and you’ll see that the 1981 misery index was 17.97%.  In fact, the worst year ever for the misery index was 1980, where the misery index was 20.76% under Jimmy Carter.

With some raw data from miseryindex.us, I was able to put together this interesting chart that helps us to see the misery index in action under every president we’ve had in the last 60 years.

misery index

Have you heard of the misery index before?  Has the economy left you feeling miserable, or are you fortunate to have a good job?

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