Global| Apr 27 2009U.S. Misery Index Falls Sharply With Lower Energy Prices
by:Tom Moeller
|in:Economy in Brief
Summary
During the past year, the misery index has fallen sharply as a result of the decline in energy prices which have offset the rise in the unemployment rate. During the last three months the decline stalled, however, as the decline in [...]
During the past year, the misery index has fallen sharply as a result of the decline in energy prices which have offset the rise in the unemployment rate. During the last three months the decline stalled, however, as the decline in prices stabilized and unemployment moved higher. The March index reading of 8.1 compares to 9.6 in 2008.
The so-called misery index is a constructed U.S. business cycle indicator. It adds the year-to-year change in the CPI to the unemployment rate. Thus, for those who are employed it reflects the degree to which their incomes are being eroded by higher prices. For those who are unemployed, it reflects the diminished income and the anxieties produced by a higher level of joblessness.
Lower prices for gasoline (-39.3% y/y) and for heating oil (-30.5% y/y), along with reduced growth in "core" prices (1.8% y/y), have dropped the gain in overall consumer prices to -0.4%. This first negative reading on record has gone some way in bolstering real consumer spending power. That gain works for all consumers, whether employed or unemployed. And it counters the drastic increase in the number of those unemployed as reflected in the rise to 8.5% in the jobless rate, nearly double the low of two years ago.
Along with lower taxes, these forces together recently have combined to lift the gain in real disposable income to 2.2% from 1.3% during all of last year. During the last twenty year there has been a negative 55% correlation between the level of the misery index and the growth of real disposable income.
The misery index can be found in Haver's USECON database under Business Cycle Indicators.
A white paper describing the process and methodologies employed by the federal banking supervisory agencies in their forward-looking capital assessment of large U.S. bank holding companies was published on Friday. It can be found here.
Recession Catches Rural America from the Federal Reserve Bank of Kansas City can be found here.
| U.S. Misery Index | March | February | March '08 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Misery Index | 8.1 | 8.2 | 9.2 | 9.6 | 7.5 | 7.8 |
| Consumer Price Index | -0.4 | 0.1 | 4.1 | 3.8 | 2.9 | 3.2 |
| Unemployment Rate | 8.5 | 8.1 | 5.1 | 5.8 | 4.6 | 4.6 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
