We’re at our Lowest Level of Misery in 56 Years, Thanks to Gas Prices
By one measure, the U.S. economy is the best it’s been since the presidency of Dwight Eisenhower. The recent plunge in inflation has helped drive the U.S. Misery Index to its least miserable level since the spring of 1959.Additional analysis from Jerome Garcia:
The Misery Index was proposed by the economist Arthur Okun in the 1970s, while he was a scholar at Washington’s Brookings Institution. When Mr. Okun proposed the index, the U.S. was in the grip of stagflation — a period of both high unemployment and high inflation. To capture the era’s misery, Mr. Okun (who had been on Lyndon Johnson’s Council of Economic Advisers) proposed simply adding the unemployment rate and the annual inflation rate into a new number.
The index captured the economic anxiety of the time. Not only were many people struggling to find work in the 1970s, they were also grappling with accelerating price gains. The Misery Index reached an apex of 21.9 in May of 1980 when the unemployment rate was 7.5% and the inflation rate was 14.4%, as measured by the Consumer Price Index. The inflation of the era was finally brought under control when Federal Reserve Chairman Paul Volcker pushed interest rates as high as 20% to throttle the price gains. Inflation came down quickly, unemployment followed it down a few years later, and the U.S. settled in for two mostly good economic decades in the 1980s and 1990s....MORE
