The Misery Index is sadly becoming more important to ordinary Americans suffering under spiraling consumer price inflation as the index born in the hard times of the 1970s continues to rise under the economic policies of the Biden administration.
The Misery Index is simple to calculate and understand. The index comes from adding the U.S. unemployment rate to the inflation measured by the consumer price index. The metric is intended to reflect economic distress resulting from the risk of being out of work combined with an increased cost of living.
As inflation continues to increase each month, the cost of living goes up and the value of American savings and weekly paychecks go down. As unemployment and the less quantifiable underemployment numbers go up, more people fall into poverty or bankruptcy.
Adding the current unemployment rate of 3.8 percent to the CPI of 7.87 percent produces a Misery Index of 11.67 percent. That is an increase over the previous month’s number of 11.48 percent. When Joe Biden assumed office in January 2021, the index sat at 7.70 percent.
Skyrocketing inflation is clearly driving the surge in the Misery Index recently as prices are rising faster than any time in the last four decades. Even as more Americans return to work after the COVID pandemic, higher prices mean they are able to purchase fewer consumer goods.
Inflation in effect operates as a tax, as the government funds the recent congressional spending sprees by borrowing at unprecedented levels and has the Federal Reserve monetize the national debt by creating money to purchase debt now owed by the taxpayers. If the federal government is unable to fund spending by taxing existing dollars, it funds it by taxing Americans’ future earnings and present dollar values through unrestrained borrowing.
On Tuesday, the U.S. Bureau of Labor Statistics issued the February Producer Price Index. That index measures increased costs paid by manufacturers and other producers for the goods and services they use to supply consumer goods to the American public. The February index indicated a massive 10 percent increase over last year and is the first time the index has hit double figures since it was created as a metric in 2010. Increases in PPI indicate certain further increases in consumer prices in the near future.
Meanwhile, surging energy and gas prices are contributing directly to additional increases in costs for production and transportation of goods through the supply chain.
As much as the Democrats might like to use international events as a distraction from their disastrous economic policies, Americans are likely to have the ideas behind the Misery Index squarely in mind as the midterm elections approach this fall.