Wednesday, July 23, 2008

Misery Index: It's NOTHING Like the 1930s or 1970s

We hear a lot of comparisons of today's economic conditions to the inflationary 1970s (see shaded area above) and even the Great Depression and the 1930s (see shaded area). The chart above shows the annual Misery Index from 1930 to 2008, calculated as the sum of a) the CPI inflation rate and b) the unemployment rate. Notice that today's single-digit Misery Index of 9.7% isn't anywhere near to the double-digit levels througout both the 1930s and the 1970s, with peaks around 20% in both decades. The Misery Index is also lower today than during most of the 1980s.

Bottom Line: Cheer up, these are the good old days,
says Jeff Jacoby in today's Boston Globe.

4 Comments:

At 7/23/2008 8:29 AM, Anonymous qt said...

Although the way that CPI is calculated has changed over the years, the conclusion still appears to be largely on balance.

 
At 7/23/2008 8:33 AM, Anonymous Anonymous said...

Using Pre-Clinton CPI numbers as compiled by John Williams at Shadow Government Statistics, the CPI is approximately 8%. Using US government unemployment number of 5%, the misery index is closer to 13. Comparing apples to apples, the misery index is higher than reported. Not the end of the world but a more realistic estimate.

 
At 7/23/2008 2:06 PM, Blogger Anuj said...

if today was 1931, you'd come to the same conclusion by using this chart. unless you're arguing things have gotten as bad as they will and we're now on the "up and up".

 
At 7/23/2008 4:04 PM, Anonymous Anonymous said...

The cable news media hysteria makes up the delta.

 

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