Young adults today are likely unfamiliar with the term “misery index.” But they could soon learn about it the hard way, thanks to President Joe Biden’s economic incompetence.
The misery index, a measure started under President Lyndon Johnson, is a simple measure combining the unemployment rate and the inflation rate. The idea being that joblessness and a fast-rising cost of living produces palpable misery in the country.
The index has long been forgotten because it’s been so low for so long. It hit a high of 21.9 under Jimmy Carter way back in 1980, but by the end of President Reagan’s first term, it had been cut in half. The average under President Donald Trump was just 6.9.
The misery index spiked at the start of the COVID-19 lockdowns, jumping from 5.94 to over 15 in one month with the surge in unemployment. But then it quickly dissipated, as the economy under Trump rebounded faster than the so-called experts had predicted. By the time Trump left office, the misery index was back down to 7.7.
A funny thing has happened since.
The misery index has climbed each and every month that Joe Biden has been president. In February, it ticked up to 7.9, then rose to 8.6 in March. Last month, the misery index hit 11.3, as the monthly inflation rate climbed to 5.4% while the unemployment rate edged up to 5.9%.
That means the misery index is now higher than it has been (pre-pandemic) since the Great Recession. It’s also higher than the post-World War II average of 9.2. Under Trump, it averaged 6.9, the third-lowest of any postwar president.
What’s driving the current rise in the misery index?
Biden and his fellow Democrats decided to pass another massive COVID-19 bailout — the “American Rescue Plan” — despite warnings from even liberal economists that flooding the economy with another $2 trillion in cash posed a serious risk of inflation.
Despite repeated assurances from the White House and the mainstream press earlier in the year that this was just a blip, the inflation rate has been steadily climbing. The June inflation number was the biggest increase since 2008.
Meanwhile, the unemployment rate remains stubbornly high, principally because Biden and the Democrats who control Congress extended the hugely misguided unemployment bonus (which they also insisted be a part of the original CARES Act ). For nearly half the workforce, being unemployed is currently more lucrative than collecting a paycheck.
A Morning Consult survey out on Wednesday made the impact of this clear. It found that almost 2 million adults say they’ve turned down jobs because the unemployment benefits are so generous.
Here again, the White House says this is a non-issue. Biden dismissed the suggestion that the $300 weekly bonus was a reason why 9 million jobs are going begging while 9 million adults collect unemployment, saying “we don’t see much evidence of that.”
A new survey of small businesses by the National Federation of Independent Business provides plenty of such evidence. The survey found that “many firms can’t hire enough workers to efficiently run their businesses, restricting sales and output.”
The NFIB survey also found that “the net percent of owners raising average selling prices increased 7 points to a net 47%, seasonally adjusted, the highest reading since January 1981.” That was right around when the misery index was at its Carter-stagflation-era peak.
Right now, the public might not be feeling the pinch of the misery index because checks from the government are acting as a temporary salve (which for the time being now includes not only the $300 weekly unemployment bonus but a monthly $300 per-child check).
But it isn’t going entirely unnoticed. The IBD/TIPP economic optimism index dropped in July, while the poll’s measure of financial stress climbed. The poll also found the public’s support for Biden’s handling of the economy took a hit.
Biden came into office promising to rescue the economy. Instead, he’s managed to resurrect the specter of 1970s-style misery.
— Written by the I&I Editorial Board