Each month economists attempt to gauge how average Americans are weathering the ups and downs of the U.S. economy. By using the simple yet clever technique of adding the U.S. unemployment rate (4.8%) to the current rate of inflation (6.22%) economists quantify the economic well-being of the country into a Misery Index. The current U.S. Misery Index stands at 10.82%.
But what exactly does the Misery Index tell us? First, we know that as the rate of inflation goes up, the cost of living increases. Next, as the unemployment numbers rise, more and more people fall into poverty. Consequently, the Misery Index acts as a kind of shorthand or metric with which to gauge the health of the economy as a whole since both employment and inflation impact the average American wage earner.
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Inflation erodes the purchasing power of the consumer. Higher prices mean fewer goods can be purchased. In other words, even as Americans get back to work after the disruptions of the pandemic, their wages, savings, and investments buy less and less, not because they’ve done anything wrong, but because of the mere passage of time increasing the prices of goods and services such as housing, food, and transportation. Life simply becomes more and more expensive.
As the Joe Biden presidency lurches on, average Americans are feeling the pinch as the Misery Index slowly creeps upward. Just one month ago, the index stood at 10.19%—that’s a 0.63% increase. Does it really matter who is in the White House? The answer is yes.
When the Misery Index is placed over the terms of the U.S. presidents, it becomes fairly obvious that most Americans have been better off under most Republican (red) presidents. It’s even apparent that they were enjoying a fairly robust economy with a low Misery Index hovering around 5.0% to 6.0% under Donald J. Trump until the COVID-19 pandemic hit. It’s also apparent that the Biden administration’s economic policies are increasing the everyday American’s misery. When Biden took office in January 2021, the index stood at 7.70% and it has climbed every month since.
Keep in mind, a recent Harvard School of Business paper published in the American Economic Review found that unemployment causes Americans 1.7 times as much misery as inflation does, so realistically the Misery Index is even more painful to the average American than these numbers show. Also, keep in mind that the mess at our ports continues to negatively impact the U.S. supply chain while our leftist leaders do little to nothing to fix the problem.
Americans would do well to remember this misery and these economic numbers under Biden when it comes time to vote in 2022 and 2024.
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