Remember the Misery Index? ... Today's Woes in a Non-Inflationary Economy Compared to Yesteryear

During the days of high inflation in the 1970s, a 'Misery Index' was in vogue. Adding (1) the inflation rate to (2) the level of unemployment served as an indicator of how 'miserable' conditions were in the U.S. economy. We suffered both double digit inflation and unemployment at the same time.

But that was then and this is now. Today we borrow too much and save too little, even though there is no need to 'buy ahead' of the sure-and-soon-to-be-good-old-days inflation related price increases. Nor is there a good reason to borrow as much as possible to make the new home purchase to beat the 'inevitable' price increase and/or later sell the home at the 'inevitable' inflated price. In those now gone inflation ridden 'good old days,' we borrowed too much. Debt became our erroneously perceived friend and saving came to be a game for suckers.

Unfortunately, too many of us still play the borrow, spend and don't save game today. And for those who do manage to save and invest, we are investing too much of our 401(k) and IRA money in bonds, even though inflation is pretty much out of the picture.

But we'll set all that ugly history aside for now. The misery index hit a 59-year low, so why are we still miserable? has the updated story:

"Today’s problems aren’t as easy to enumerate as they were in the 1970s

The misery index -- the sum of the unemployment rate and the inflation rate -- is the lowest it's been since 1956. But who cares?

The misery index just fell to a 59-year low, but nobody seems to be very happy about the lack of misery.

The misery index was invented by economist Arthur Okun in the 1970s as a way of expressing his frustration at the two main economic problems of the day: High unemployment and high inflation, what was known at the time as stagflation.

To calculate the misery index, you merely add up the two numbers: the unemployment rate plus the inflation rate over the past year.

In September, the unemployment rate was 5.1% and the inflation rate was zero, so the misery index dropped to 5.1%, the lowest it’s been since it was 4.7% in April 1956.

The misery index used to be a big deal.

Jimmy Carter used it to great effect in his campaign against President Gerald Ford in 1976, when the index was at 13.2 on Election Day. And naturally, Ronald Reagan turned the tables on President Carter in the 1980 election, when the index peaked at 22.0 in June 1980. Even Mitt Romney tried to reinvigorate the misery index in his 2012 campaign.

Watch: Reagan attacks Carter for miserable Misery Index

But in today’s economy, the misery index doesn’t get any respect. We have a low unemployment rate and almost no inflation to speak of, but we’re still miserable. According to an NBC News/Wall Street Journal poll from mid-September, 62% of Americans say the country is on the wrong track, versus 30% who says it’s on the right track.

Today, we’re miserable about complicated problems that aren’t so easy to put into just one number: High underemployment, anemic wage growth, the widening gap between rich and poor, the polarization in our civic life, the dysfunction of government, our amoral corporations, the sinking feeling that America’s best days could be behind us.

What makes us miserable today isn’t stagflation, but stagnation, not just of the economy but of our hopes and dreams for the future.

The misery index isn’t something anyone cares about any more. Like disco and velour, it’s a relic of history. No one in the White House is popping champagne today because the Misery Index hit a 59-year low. And no Republican candidate will campaign on it in 2016 as Reagan did in 1980.

Someone’s going to have to come up with a better way to measure the malaise of our time."

Summing Up

The good old 'Misery Index' days of high inflation and COLA related big wage increases weren't all that good, of course.

Perhaps the worst thing was that we borrowed and spent instead of saving for a rainy day. But today things are worse. It isn't 'raining' inflation, but we still aren't saving adequately for our future needs. Too much debt in today's low inflation environment is a really bad thing.

With respect to the current 'Misery Index,' today's rate of inflation is low, as is the official unemployment rate (but only as a result of ignoring part timers, people not looking for work and workforce dropouts, of course). And despite the 'Misery Index' signals, things are still miserable for too many indebted, undereducated and underemployed American individuals and families.

When will We the People switch from a borrow, spend and don't save high inflation mentality?

And when will We the People instead embrace a low inflation mindset and high productivity, globally centered, competitive way of life? Soon, let's hope.

That's my take.

Thanks. Bob.