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Misery Index update

This index, the sum of the CPI and the unemployment rate, will likely be the focus of next year's elections. I expect that CPI will be in a modestly rising trend for the next year, and it's likely that the unemployment rate will decline modestly. If those predictions hold, the Misery Index will be at least as high as it is today, and that will be enough to fuel discontent with the economy.

While the index has risen significantly since Obama took office (from 7.8 in Jan. '09 to the current 12.7), most of the rise is due to inflation, which rose from 0 in Jan. '09 to the current 3.6%. To be fair, inflation is the purview of the Fed, not the president, as I argued yesterday. The unemployment rate has only risen from 7.8% to 9.1% on Obama's watch, whereas it rose from 4.2% to 7.8% on Bush's watch.

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