March 20, 2023

The misery index is an economic indicator created by Arthur Okun. It has been part of the policy landscape for the last few decades. It was memorialized in the Full Employment and Balanced Growth Act of 1978, also known as the Humphrey–Hawkins Act. Humphrey-Hawkins directed the Fed to effectively promote the goals of maximum employment and stable prices. The misery index helps determine how the average citizen/voter is doing economically. It consists of the sum of the unemployment rate and the inflation rate. We contend it is useful as both a good report card and a good forecasting tool. But is it? In order to answer all these questions, we need to calculate the misery index for the different periods. During the first two years of the Biden administration, the misery index has averaged 10.4%. Slightly higher than the average for the first two years of the previous administration, see Table 2. Hence viewed from this perspective, the Biden administration is in the middle of the pack. However, those who got reelected posted an average misery index of 9.5% versus an average of 11% for those who did not win reelection. The data reported show that during the third year the reelected administrations improved their misery index to 8.6% and further declined to 8.1% by the fourth year. In contrast the one termer’s misery index deteriorated to 11.6% by the fourth year. If the misery index is as good an indicator as we believe it is, then the Biden administration will have to engineer a decline in the index to the 8.6% range to have chance at reelection. An achievable goal, in our opinion.

You must have an active account to view these reports. You may register for a trial here

Download Complete Report in PDF Format

Download Complete Report in Word Format