U.S. Economic Misery Remains High, But Not Historic

The "misery index" is a popular indicator of stress in the U.S. economy and it now shows plenty of it. The idea for the figure was created by Yale University economist Arthur Okun. The two components of the series are the unemployment rate and the year-to-year change in the Consumer Price Index. As typically measured, the index's current level of 10.8 is up 5.1 percentage points from its 2006 low as the rise in the unemployment rate to 9.6% has overwhelmed the slow rate of consumer price inflation.

Another way to construct the index, however, would show more economic pain. The real index using the overall unemployment rate, which includes marginally attached and involuntarily part-time workers, also has doubled to 17.0% from its 2006 low. Many economists, as well as regular people, argue that economic distress by this measure is greater since it is due to lost employment. With higher prices for a product, the choice can be made to do without it or switch to something else, but a similar choice may not be available to those without a job.

Notable is the fact that for all this misery, times have been much worse during the postwar period. In 1980, the conventional index level reached a peak of 22.0 as higher oil prices drove inflation up and unemployment surged with two recessions. That index was more than double the level of the early-1970s. Shocking was the surge in the index from its early-1950s low of 3.0%.

The data in this report are available in Haver's USECON database.