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?

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