The Misery Index and You (or, the 38.5 Year Rollercoaster)

During the L. B. Johnson administration, an economist named Arthur Okun devised a simple system to measure the national economic performance; he called it the Misery Index, and it added two important figures together: the rate of inflation and the rate of unemployment concurrent for a given period of time. The formula is no more complex than simple addition (unless, of course, you seek averages, in which case you must know how to divide *gasp*).

In any case, my thoughts turned to the so-called misery index for two reasons: one, Ronald Reagan, in his address to the 1988 Republican National Convention, made mention of the index's use during the 1976 campaign in order to discredit incumbent Gerald Ford, using it himself in turn to discredit Jimmy Carter while showing the strides his administration had made toward the restoration of the economy - this set a precedent in my mind relating to the economic situation through different decades; two, I overheard a comment the other day relating to "Reagan's Recession" and what an "awful" president he had been. The utterer had disappeared before I could retort with "remember the '70s" and "it's about the whole picture, not about whether or not your folks could sell a house," but it got the ball rolling in my head: I HAD to devise a way to show simple economic indicators from where we've been prior to Reagan, through his administration, and right up to the present. If nothing else, it would help to show the state of our current "recession" and perhaps put it into perspective for some people.

My first thought was to create a so-called "Pocket Misery Index Calculator" which could be produced at will from my haversack of goodies, until I found http://www.miseryindex.us/, which not only shows Okun's index by year (subdividing for administrations as well), but also by month from 1948, as well as both factors of the formula by month, again from 1948. This can be accessed from anywhere (maybe not Kansas, but anywhere else). I now have all the ammunition I need to wage a war of attrition upon the masses.

I shall heal the contrite!!!

So I spent a great deal of time this evening putting together raw numbers, and I must say that there are a few results what surprised even myself. I do not have graphs as of yet, but I will, and when I do I will post them. Readers beware.

What I do have are figures...many, many figures. I have broken them down in the following manners, beginning in 1969:

• Inflation rates by year, including averages per administration.
  
• Unemployment rated by year, including averages ditto.
  
• Misery index ditto.
  
• Averages for all three by administration.
  
• Averages ditto by decade (e.g. 1970-1979).
  
• Averages ditto by semidecade (including the seven year period 1969-1975, and 2.5 year period 2006-present).

For now, I will abbreviate: the rate of inflation through the Nixon administration was 5.00, unemployment was 4.98, and misery was at 9.98. Spike for poor Ford, with 8.66, 7.27, and 15.93, respectively. And for Carter: inflation - 9.73, unemployment - 6.54, misery - 16.27! Remember, these are averages, not high-low.

Reagan: inflation - 4.56, unemployment - 7.54, misery - 12.19; G. H. W. Bush: inflation - 4.38, unemployment - 6.23, misery - 10.68.

Clinton: inflation - 2.60, unemployment - 5.20, misery - 7.8; G. W. Bush: inflation - 3.06, unemployment - 5.53, misery - 8.58.

For the record, the current misery index (May, 2008) is 9.68.

What we see (and you will, too, in coming days) is that the mid '70s spiked hard, and it failed to relent until 1981. The high water mark was 1980, with 13.58 inflation and 7.18 unemployment for a misery of 20.76! This was, may I remind the reader, prior to Reagan's election.

The rampant "misery" of these years culminating the decade did lead to significantly higher unemployment rates for 1982 and 1983, but inflation fell from 13.58 in 1980 to 10.35 in 1981 to 6.16 in 1982 to 3.22 in 1983. Unemployment subsequently rebounded with the period 1984-1988 with 7.51 (1984), 7.19 (1985), 7.00 (1986), 6.18 (1987), and 5.49 (1988). This is a far cry from where the nation was just years prior.

Long story short: the '70s were a really, really baaaad time economically, and it took time, initiative, effort, and more time to right the ship, so to speak. It has always been easier to destroy than to create, and that decade did a fine job of economic destruction, and it took a whole lot of effort (all through the mid '90s, in fact) to put things right again. That's twenty years...Sheesh!

Compare that to the past few years:

• 1996-2000: inflation - 2.48; unemployment - 4.60; misery - 7.09
  
• 2001-2005: inflation - 2.55; unemployment - 5.83; misery - 7.98
  
• 2006-present: inflation - 4.07; unemployment - 5.72; misery - 9.79
  

And I will take Bush's 9.68 misery against Carter's 20.76 any day; people need to look at the past and reflect upon it rationally. Tomorrow I will post my notes. Happy reading!