The Real Misery Index - November 2009: A Few Positive Trends

In a turnaround from recent months, the slight dip in unemployment represents one of the few positive trends in the economy, according to HuffPost's Real Misery Index.

The index dropped from to 32.9 in September-October to 29.6 in November, largely due to a decrease in the U6 unemployment rate, which tracks part-time workers looking for full-time employment and those who've given up looking for work.

But in general, the numbers are still gloomy with no sign of relief when it comes to credit card delinquencies and home equity delinquencies. And there are some worrisome inflationary trends -- though food and beverage prices dipped slightly compared to last year, gasoline prices rose 23.6% compared to November 2008.

Despite looming inflation, some observers predict that the Fed will keep interest rates low throughout 2010. TheHousingGuru.com's John Mulkey writes:

"To do otherwise would be to sabotage an economy that has been both erratic and unstable, and would prove fatal in an election year. Though the government will prefer to fight looming inflation, doing so would simply cause the economy to nosedive; and I doubt they'll be willing to take that risk."

To formulate our index, which provides a better snapshot of the economy than the often-criticized misery index (inflation added to unemployment), we used a more accurate unemployment statistic (the U6 formulation), with the inflation rate for three essentials (food and beverages, gas, medical costs), and year-over-year percent changes in credit card delinquencies, housing prices, food stamp participation, and home equity loan deficiencies. We gave equal weight to the broad unemployment numbers and the combination of the other seven metrics (with housing prices having an inverse relationship to the index).

Here is a chart showing the real misery index versus the traditional misery index -- which adds the inflation rate to the unemployment rate -- for 2009 so far:

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