Misery index

The misery index is constructed by adding the unemployment rate to the inflation rate.

The misery index is constructed by adding the unemployment rate to the inflation rate. The higher the number, the worse the financial pain felt by the average person. Faced with a lack of jobs and rising prices, noted its creator, the American economist Arthur Okun, you feel miserable. There is, perhaps unsurprisingly, a strong correlation between the misery index and the recorded crime rate a year later.

The US index hit its all-time peak back in 1980 under Jimmy Carter and recorded its biggest decline during Ronald Reagan's presidency in the 1980s. Meanwhile, in Britain the index is now at its highest level since the early 1990s after the latest inflation data revealed that the Retail Price Index is running at 5.6%, its highest level since 1991, and the unemployment rate is at its highest since 1994. For Britain's all-time peak, however, you need to look at the 1970s, when it topped 30 as the inflation rate marched into the 20s and unemployment soared.

See Tim Bennett's video tutorial:What is the Vix?

Recommended

Margin call
Glossary

Margin call

When an investor borrows to bet on markets, they put down a deposit known as “margin”.
2 Apr 2021
Resource curse
Glossary

Resource curse

The term “resource curse” refers to the observation that countries with abundant natural resources also tend to be less economically developed than th…
14 Jan 2021
Balance of payments
Glossary

Balance of payments

The balance of payments refers to the accounts that sum up a country's financial position relative to other countries.
8 Jan 2021
Yield-curve control
Glossary

Yield-curve control

Yield-curve control is when a central bank aims to control long-term interest rates by pledging to buy (or sell) as many long-term bonds as needed to …
25 Dec 2020

Most Popular

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021
House prices: from boom to even bigger boom
House prices

House prices: from boom to even bigger boom

UK house prices have risen to new to record highs, says Nicole Garcia Merida. Demand continues to outpace supply, but continued low interest rates, th…
9 Apr 2021
Nuclear power might never be popular – but now looks a good time to invest
Commodities

Nuclear power might never be popular – but now looks a good time to invest

Nuclear power gets a very bad press, but it is the ultimate renewable energy source. Interest in it is perking up again, says John Stepek. Which means…
9 Apr 2021