Misery Index

Updated August 19, 2015

What is the Misery Index?

The misery index is an economic indicator designed to help determine how the average citizen is doing economically and it is calculated by simply adding the inflation rate to the unemployment rate.

Since both high unemployment and high inflation are major factors to the average wage earner, it’s a quick and dirty metric to gauge the health of the economy because as inflation rises the cost of living increases and as unemployment rises more people cross the economic line into poverty.

US_Misery_Index_Aug_2015Unfortunately,  although data for the annual inflation rate  is available back to 1914 (the CPI index began in 1913) data for the misery index is only available back to 1948 due to the lack of unemployment numbers prior to 1948.

The original Misery index was created by economist Arthur Okun during the Johnson administration in the 1960’s, not by Robert Barro as some people mistakenly believe. Barro created the “Barro Misery Index” (BMI) in 1999, which also includes interest rates and GDP trend into the mix.

Approximately ten years later Steve Hanke updated Barro’s work by applying it to other countries outside the United States.  Hanke’s modified misery index uses unemployment, plus inflation as Okun did but then adds  interest rates, and then subtracts the year-over-year percent change in per-capita GDP growth. Assuming that high interest rates also add to the “Misery” but growth in GDP reduces the misery.

Interestingly, when the original misery index was conceived by Okun it was actually quite low by recent standards.

Jump to: Misery Index Chart The Misery Index and Politics Which Party Has a Better Misery Index Record?
The Misery Index and the Stock Market Definition of Misery Index Recent Misery Index Numbers in Table Form

Surveying Happiness and Weighting the Misery Index

According to a paper in the American Economic Review  called “Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness unemployment causes 1.7 times as much misery as inflation and so the misery index should probably be calculated by multiplying unemployment by 1.7 and then adding it to inflation.

Misery Index Current Commentary:

Misery Index  in 2014-2015:

The misery index as of  August 2015 (based on the most recent official government data for July 2015)  is at 5.47% (5.3% unemployment and 0.17% inflation) down from a peak of 12.87% in both October and November 2011 which was pretty miserable. With inflation at historically low levels the major component of the Misery index is unemployment. The average inflation rate since the beginning of the Misery Index in January 1948 is 3.60% which is 3.43% higher than current inflation levels so if inflation were “average” the misery index would be much higher.

In addition, the Unadjusted Gallup numbers for unemployment differ drastically from the government numbers (6.2% Gallup vs. 5.6% BLS).  Typically MIT’s Billion Price Project inflation index is about 1% higher for inflation so using non-government numbers the Misery index would actually be much higher.

Note: During times of deflation (i.e. negative inflation) the misery index might not be truly representative of the actual misery of the general population. Although falling prices can help alleviate suffering, deflation does not necessarily guarantee “good times” if that were the case the “Great Depression” would have to be renamed “Happy Days” since prices fell 9% in 1931 and then another 10% in 1932. See: The Great Depression The Deflationary 1930′s–  1930-1939. Even though the “Roaring 20’s” had massive deflation not everyone benefited. Those in the cities prospered but farmers suffered severely as the prices of their produce fell drastically in 1921 and 1922. See The “Roaring Twenties” Inflation and Deflation 1920-1929 .

Misery Index  in 2014:

The misery index fell during 2014 as the inflation rate plummeted due to falling energy prices during the 2nd half of the year. Unemployment also fell considerably based on Bureau of Labor Statistics numbers and even fell based on Gallup numbers (although not as sharply) and the Gallup Head Says Unemployment Rate is “A Big Lie”.

Misery Index  in 2013:

In 2013 the Misery index was still in the moderately miserable range . It was slightly below the position at the end of the Bush 1 term and similar to the middle of both of Bush 2 terms.  The misery index began the year at 9.49% and finished the year at 8.20%.  Although government numbers indicate that both unemployment and inflation are falling non-government numbers indicate both inflation and unemployment are higher than reported by the government.

During 2012 crude oil prices and gasoline prices fell and the average inflation rate for the year was a relatively painless 2.07% but Unemployment fell only slightly from 8.3% in January to 7.8% in December although there is some question about the accuracy of those numbers.  See: Is the Government Fudging Unemployment Numbers? .

See: Can We Trust Government Inflation Numbers? Employment vs. Unemployment– More evidence of Government Number Fudging Is the Government Fudging Unemployment Numbers?

Misery Index Chart

U.S. Misery Index August 2015

Click for Larger Image

During the Bush 2 term, the misery index started at 7.93% then peaked at 11.40% and then went back to 7.39% averaging 8.11% over 8 years. Obama’s first term began at 7.83% (almost identical to where Bush began) and then peaked at 12.62% before declining to current levels, averaging 9.57% so far. However, an argument can be made that the initial 7.83% was artificially low due to the collapsing stock market and related deflation. Perhaps a more representative number of actual misery would be between 10% and 11%. But  the misery number is still historically high.

The Misery Index and Politics

Historically, a high (or climbing) misery index has been a political football resulting in a change of Presidents while a low (or falling) misery index resulted in reelection. Eisenhower (R) was reelected in November 1956 with a misery index of 6.53%. Johnson (D) ended with a misery index of 8.13 in November of 1968 and Humphrey (the Democratic candidate replacing Johnson) lost to Nixon. Early in the Nixon (R) administration the misery index climbed to a high of  11.67% in December 1970. From there through the election in November 1972 the index was falling and Nixon was re-elected. As a matter of fact, according to Wikipedia, “Emphasizing a good economy and his successes in foreign affairs, such as ending American involvement in Vietnam and establishing relations with China, Nixon won the election in a landslide.”

However, the Misery Index bottomed two months later at 8.55% and from there  the  misery index climbed drastically. Finally, Nixon resigned when his misery index climbed to 17.01% in July of 1974. Although Watergate was the trigger one has to wonder if the economy was doing well would Watergate have been such an issue?

Gerald Ford (R) took office in September 1974 with a misery index of 17.85%. It peaked at 19.9% a few months later and then fell steadily as his term progressed to 12.66% in December 1976 but he still lost. Perhaps if his term had been slightly longer (i.e. he had a full term) he might have been reelected. Jimmy Carter (D) quoted the misery index extensively during his 1976 Presidential campaign to unseat Ford, even though Ford actually presided over a declining Misery index. Carter on the other hand presided over an increasing misery index of his own, starting his term at 12.72% and increasing to levels well above Ford’s highs.

Carter’s misery index peaked at 21.98% in June of 1980.  His misery index was still above 20% come November 1980, so Reagan (R) was able to use Carter’s own words and the misery index against him in the following election and make Carter a rare one-term President.

Reagan took office in January 1981 with a misery index of 19.33%. By November of 1984 the misery index had fallen steadily to 11.25% and Reagan was reelected. By November 1988 the misery index was 9.55% and so the Republicans were able to elect Bush 1 (R) in the hopes of more prosperity to come. But four years later  (November 1992) the misery index was higher at 10.45% and Clinton was elected.

In January the index stood at 10.56%. By November 1996 the misery index had fallen to 8.66% and Clinton (D) was reelected. By November 2000, the misery index still stood at 7.35% and Bush 2 (R) was elected.  This election and the Nixon win over Johnson are the only two elections in the history of the misery index where the misery index was relatively low when parties changed. But in both cases the misery index was climbing fairly steeply prior to the election. So it is possible that people felt they were becoming worse off. During Bush 2’s first term, the misery index rose slightly to 8.92% by November 2004 and the election was very close. Resulting in Bush 2 barely getting re-elected.

In July of 2008, toward the end of Bush’s 2nd term the misery index climbed to 11.40% and by September of 2008 it was still 11.14%.  Even though it had fallen to 7.87% by November the public mood was still miserable due to the stock market crash and unemployment continued to rise. The deflationary collapse was due to a massive contraction in the money supply due to a stock market crash rather than any positive economic factors.

In effect the crashing stock market led everyone to feel poorer (and most were poorer as the value of their house and any investments had declined precipitously) thus the market trumped the Misery index itself.  So the social mood was ready for a change in political parties. Worldwide this same phenomenon appears to hold as well, this seems to be confirmed by the elections in both France and Greece where their economies were faltering and the seated Presidents were both voted out.

In the most recent 2012 election apparently Obama was seen as presiding over a falling Misery index and so he was reelected. For more information on how Social Mood affects politics and the economy See: Social Mood Resources at your Fingertips.

Which Party Has a Better Misery Index Record?

With all the talk about the misery index in politics it begs the question: Which party has performed better?  Simply looking at the chart it is possible for both parties to say they have done better, each party has had it’s good times and bad times.  Looking at the overall numbers however, Democratic Presidents have done slightly better with an average overall misery index of 9.04% while Republicans have had an average overall misery index of 9.8%. But if we look only at more recent history  i.e. Carter through Obama we get a different picture.

Here we see Democrats with an average of 10.30% and Republicans at 10.25%. Also since Congress actually makes the laws, it may be more accurate to include the political make up of congress to get a more accurate indication. Or perhaps looking at the last 3 years of each presidency would be more representative of a particular president’s policies.

Since individual states’ political parties have a more direct influence on their economics… See Unemployment Rates by State to see which political party has had the best effect on each state’s unemployment rate.

The Misery Index and the Stock Market

Inflation Adjusted Stock Prices If you look at the Inflation Adjusted NYSE Stock Market you will see that in inflation adjusted terms the previous market peak was in February 2011 at 8831 which was just surpassed. But the real inflation adjusted peak occurred in July 2007 at 11373, while in inflation adjusted terms the NYSE was at 9118 back in August 2000. In March 2013, the market was at 9117 So in 13 years in inflation adjusted terms the market went exactly nowhere.  Currently the market is up a bit with the NYSE at 9551 as of this writing. But most people do not look at the market in inflation adjusted terms thus being fooled into thinking it is actually up.

Definition of Misery Index

The misery index is defined as, a measure of the economic well-being of the country, which is calculated by taking adding the unemployment rate and the inflation rate.

Recent Misery Index Numbers

Date U-3 Unemployment CPI-U Inflation Misery Index
Jan-09 7.80% 0.03% 7.83%
Feb-09 8.20% 0.24% 8.44%
Mar-09 8.60% -0.38% 8.22%
Apr-09 8.90% -0.74% 8.16%
May-09 9.40% -1.28% 8.12%
Jun-09 9.50% -1.43% 8.07%
Jul-09 9.50% -2.10% 7.40%
Aug-09 9.70% -1.48% 8.22%
Sep-09 9.80% -1.29% 8.51%
Oct-09 10.10% -0.18% 9.92%
Nov-09 9.90% 1.84% 11.74%
Dec-09 9.90% 2.72% 12.62%
Jan-10 9.70% 2.63% 12.33%
Feb-10 9.70% 2.14% 11.84%
Mar-10 9.70% 2.31% 12.01%
Apr-10 9.80% 2.24% 12.04%
May-10 9.60% 2.02% 11.62%
Jun-10 9.50% 1.05% 10.55%
Jul-10 9.50% 1.24% 10.74%
Aug-10 9.60% 1.15% 10.75%
Sep-10 9.60% 1.14% 10.74%
Oct-10 9.70% 1.17% 10.87%
Nov-10 9.80% 1.14% 10.94%
Dec-10 9.40% 1.50% 10.90%
Jan-11 9.10% 1.63% 10.73%
Feb-11 9.00% 2.11% 11.11%
Mar-11 8.90% 2.68% 11.58%
Apr-11 9.00% 3.16% 12.16%
 May-11 9.00% 3.57%  12.57%
 Jun-11  9.10% 3.56% 12.66%
 Jul-11 9.10%  3.63% 12.73%
 Aug-11  9.10% 3.77% 12.87%
 Sep-11  9.00% 3.87% 12.87%
 Oct-11 8.90% 3.53% 12.43%
 Nov-11 8.70%  3.39% 12.09%
 Dec-11  8.50% 2.96% 11.46%
 Jan-12  8.30% 2.93%  11.23%
Feb-12  8.30%  2.87% 11.17%
 Mar-12 8.20% 2.65% 10.85%
 Apr-12  8.10% 2.30% 10.40%
 May-12  8.20% 1.70% 9.90%
 Jun-12 8.20% 1.66% 9.86%
Jul-12 8.30% 1.41%  9.71%
 Aug-12 8.10% 1.69%  9.79%
Sep-12  7.8% 1.99% 9.79%
 Oct-12  7.9%  2.16% 10.06%
 Nov-12  7.8% 1.76% 9.56%
 Dec-12 7.8%  1.74% 9.54%
 Jan-13 7.9%  1.59% 9.49%
 Feb-13 7.7% 1.98% 9.68%
 Mar-13  7.6% 1.47% 9.07%
Apr-13  7.5%  1.06% 8.56%
May-13 7.6%  1.36% 8.96%
 Jun-13  7.6% 1.75% 9.35%
Jul-13 7.4%  1.96%  9.36%
Aug-13  7.3% 1.52% 8.82%
 Sep-13 7.2%  1.18%  8.38%
 Oct-13 7.3%  0.96% 8.26%
Nov-13  7.0%  1.24% 8.24%
 Dec-13  6.7%  1.50% 8.20%
 Jan-14  6.6%  1.58% 8.18%
 Feb-14  6.7% 1.13% 7.83%
 Mar-14  6.7% 1.51%  8.21%
 Apr-14  6.3% 1.95%  8.25%
 May-14  6.3%  2.13%  8.43%
Jun-14 6.1% 2.07% 8.17%
Jul-14 6.2% 1.99% 8.19%
Aug-14 6.1% 1.70% 7.80%
Sep-14 5.9% 1.66% 7.56%
Oct-14 5.8% 1.66% 7.46%
Nov-14 5.8% 1.32% 7.12%
Dec-14 5.6% 0.76% 6.36%
Jan-15 5.7% -0.09% 5.61%
Feb-15 5.5% -0.03% 5.47%
Mar-15 5.5% -0.07% 5.43%
Apr-15 5.4% -0.20% 5.20%
May-15 5.5% -0.04% 5.46%
Jun-15 5.3% 0.12% 5.42%
Jul-15 5.3% 0.17% 5.47%


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  1. Otis Hughen says

    How does our money supply nearly double in the last 5-6 years (tradingeconomics.com) and inflation stay at 1.13%? I was under the impression that inflation was just an increase in the money supply and if ours just about doubled why don’t the inflation numbers indicate it?

    • says

      Excellent Question because it shouldn’t work that way. There are a couple of possible explanations. The first is that the money supply didn’t really expand. As you know statistics can be made to say a lot of things. So a lot depends on how you measure the money supply and when you start measuring. An argument can be made that you should include the stock market in the “money supply” since stocks are considered by most people as part of their wealth and are readily convertible to cash. So they are valuable and fairly liquid. If that is the case, the money supply contracted massively during the 2008 crash. So over the last 6 years the money supply has expanded again as the stock market came back but stocks are still just slightly above their 2007 peak. So has the money supply expanded or is it just back to 2007 levels? Also has all the inflation gone into the stock market leaving the items measured by the CPI only up a little over 1%?

      The second issue is velocity of money and the money multiplier if the money is just sitting in the banks as “reserves” it is not being multiplied and so it isn’t inflationary. Once the banks start loaning more of it out at greater multiples (via fractional reserve) inflation will pick up.

      Of course as we’ve been saying for a while the CPI probably underestimates the actual inflation rate by at least 1% but that is still minor compared to the massive increase in the money supply. See also Is Quantitative Easing the same as “Printing Money”?


  1. […] where their economies were faltering and the seated Presidents were both voted out.Read more at Misery Index | InflationData.com.Some groups has tied the Misery Index to the DebtRise in Unemployment and Debt Combine for a Record […]

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