Project Syndicate/Michael J. Boskin/2-17-2022
“Several decades ago, economist Arthur Okun proposed the “Misery Index” as a simple measure of the state of the economy. Reflecting the sum of the inflation and unemployment rates, it made intuitive sense, and it aligned with the US Federal Reserve’s “dual mandate” to pursue both price stability and maximum employment. Historically, the Misery Index seems to be correlated with electoral outcomes, with the party in power penalized when the index is high and rewarded when it is low.”
USAGOLD note: The Misery Index is trending higher and setting off all sorts of alarm bells at 11.5%. Boskin sees trouble ahead for the Democrats. The only saving grace for Democrats, he says, is for the Fed to “engineer a sharp decline in the inflation rate without much of an increase in unemployment.” And that, he concludes, “would be a rare feat in the history of the Misery Index.” Consider, too, that we still have nine, long months still to go before election day, and things could get a lot worse before they get better.
Sources: St. Louis Federal Reserve [FRED], U.S. Bureau of Labor Statistics
