With all the national and international disturbing news going on right now, commentators have been raising the memories of the 1970s decade with Jimmy Carter as President, gasoline shortages, high unemployment rates, inflation in the double digits and now Iranian-like uprisings in Egypt. And don't forget, this was all just after Richard Nixon resigned after Watergate.
During the 70s, the media would refer to often to "the misery index." A measure of how miserable we were supposed to be.
The misery index was initiated by economist Arthur Okun, an adviser to President Lyndon Johnson in the 1960's. It is simply the unemployment rate added to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation both create economic and social costs for a country. A combination of rising inflation and more people out of work implies a deterioration in economic performance and a rise in the misery index.
Guess where America's misery index is right now?
11.29. The highest since George H. W. Bush's third year in office, 1991. We're headed back to Jimmy Carter's highest ever misery index of 20.76.
Compared to now, things weren't so miserable in the 70s, one might think. Then the cost of a new home in the 1970s was $26,000, a first class stamp was $.06 and a gallon of gas was $.36. The median household annual income was $8,734.
America's unemployment rates are near the highest since the days the misery index was created. The only thing that hasn't caught up with Carter's high unemployment is the economy's inflation rate. It remains artifically low, some might say. But there are signs that a higher inflation rate is about to kick in. We may be headed for some of America's highest misery index numbers yet.
Get out your Saturday Night Fever DVD, disco balls, platform shoes, polyester suits and prepare to see lots of Archie Bunker. Looks like we're headed back to the Seventies -- and the return of the misery index.
(In the chart below, the blue indicates unemployment levels and the red indicates inflation rates. Together they create the "misery index.")
