Wall Street indexes rise and fall but the economic misery index goes on forever as a guide to what is happening on Main Street. I therefore think it is well worth watching. The index, simply the sum of unemployment and inflation rates, rose in June to 10.5, the highest level in 15 years, i.e., since January 1993. That month President Bill Clinton was inaugurated and President G.H.W. Bush left office. Under Clinton the index improved but it has recently climbed back to what it was when Clinton took over.
Misery Index in the Last Month in Office of Recent Presidents
Bush 41: 10.6
Bush 43 (as of June 2008): 10.5
(Sources: Monthly Data at www.miseryindex.com, updated by www.bls.com (as of noon July 17, the miseryindex.com site is not yet updated for June 2008). The miseryindex.com site dates presidential terms as of the end of the calendar year, which in my view misallocates responsibility for January data, since the inauguration is late in the month.)
The June misery index is made up of the inflation rate of 5 percent, the highest since May 1991, and an unemployment rate previously announced by the BLS of 5.5 percent.
I think it ironic that although the misery index was invented by Arthur Okun, economic adviser to President Lyndon Johnson, it played a crucial part in the defeat of fellow Democrat President Jimmy Carter by his successor President Ronald Reagan. However, the index was declining in the last few months of Carter's administration, after he appointed the sainted Paul Volcker as Fed Chairman. Carter's candidacy was not helped by the invasion of Afghanistan by the former Soviet Union, though this invasion turned out to be the Soviets' Vietnam.