Misery Index By Year and By President

Why the Misery Index Is Not Always an Accurate Gauge of Economic Health

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The misery index is a combination of the unemployment rate and inflation. The unemployment rate measures the misery of people being laid off and having difficulty finding jobs. The seasonally adjusted unemployment rate is used to eliminate variations that occur because of the time of year.

Inflation is the rising price of goods and services over time. It's a measurement of misery because it increases the cost of living. Unless your wages rise along with inflation, you won't be able to buy as much as prices rise. That's why President Ronald Reagan said, "Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hitman." 

The misery index indicates the rate that people without work cannot afford the items they need or want. It can be misleading since unemployment is a lagging indicator

The Misery Index in a Healthy Economy

A healthy economy will produce a misery index of between 6%-7%—also known as a Goldilocks economy, where the ideal rate of growth is 2%-3%. To achieve this level of economic efficiency, employers need to find workers. There needs to exist a natural rate of unemployment of between 4% and 5%. When the rate is lower than that, companies can't find enough good workers to maximize production. As a result, growth slows, causing a rise in inflation (theoretically, inflation lowers with growth and rises with shrinkage).

A healthy economy requires some inflation. The Federal Reserve (the Fed) aims for a target inflation rate of 2% year-over-year. The Fed uses the core inflation rate that removes energy and food prices. Those prices are too volatile to give a decent indicator of economic growth, thanks to daily trading by commodities brokers.

Misery Index by President

The best and worst presidents, as measured by the misery index, both struggled with the Great Depression.

President Hoover had the worst performance according to the misery index. During his term, the index rose from 3.8% to 13.35% due to the 1929 market crash, and the Dust Bowl droughts. Hoover increased misery by implementing the Smoot-Hawley tariffs and raising taxes. 

President Roosevelt had the best performance. The misery index fell from 25.7% to 3.5%. FDR's New Deal, the end of the Dust Bowl, and the start of World War II ended the depression. In 1944, world leaders signed the Bretton Woods agreement. It replaced the gold standard with the U.S. dollar. That increased demand for the dollar and increased inflation.

Democratic presidents do better at reducing unemployment, while Republican presidents focus more on whipping inflation.

The following table is a list of historical misery indexes and the presidents associated with the periods, using data from the U.S. Bureau of Labor Statistics, the Bureau of Economic Analysis, and the Federal Reserve Bank of Minneapolis.

Misery Index by President
Year Misery Index Unemployment CPI Economy GDP President
1929 3.8% 3.2% 0.6% Depression N/A Herbert Hoover
1930 2.3% 8.7% -6.4%   -8.5%  
1931 6.6% 15.9% -9.3%   -6.4%  
1932 13.3% 23.6% -10.3%   -12.9%  
1933 25.7% 24.9% 0.8%   -1.3% Franklin D. Roosevelt
1934 23.2% 21.7% 1.5%   10.8%  
1935 23.1% 20.1% 3.0%   8.9%  
1936 18.3% 16.9% 1.4%   12.9%  
1937 17.2% 14.3% 2.9%   5.1%  
1938 16.2% 19.0% -2.8%   -3.3%  
1939 17.2% 17.2% 0.0% Depression 8.0%  
1940 15.3% 14.6% 0.7%   -1.0%  
1941 19.8% 9.9% 9.9%   17.7%  
1942 13.7% 4.7% 9.0%   18.9%  
1943 4.9% 1.9% 3.0%   17.0%  
1944 3.5% 1.2% 2.3%   8.0%  
1945 4.1% 1.9% 2.2% Recession -1.0 Harry Truman
1946 22.0% 3.9% 18.1%   -11.6%  
1947 12.7% 3.9% 8.8%   -1.1%  
1948 7.0% 4.0% 3.0%   4.1%  
1949 4.5% 6.6% -2.1% Recession -0.5%  
1950 10.2% 4.3% 5.9%   8.7%  
1951 9.1% 3.1% 6.0%   8.1%  
1952 3.5% 2.7% 0.8%   4.1%  
1953 5.2% 4.5% 0.7% Recession 4.1% Dwight Eisenhower
1954 4.3% 5.0% -0.7%   4.3%  
1955 4.6% 4.2% 0.4%   7.1%  
1956 7.2% 4.2% 3.0%   2.1%  
1957 8.1% 5.2% 2.9% Recession 2.1%  
1958 8.0% 6.2% 1.8%   -.07%  
1959 7.0% 5.3% 1.7%   6.9%  
1960 8.0% 6.6% 1.4% Recession 2.6%  
1961 6.7% 6.0% 0.7%   2.6% John F. Kennedy
1962 6.8% 5.5% 1.3%   6.1%  
1963 7.1% 5.5% 1.6%   4.4% Lyndon B. Johnson
1964 6.0% 5.0% 1.0%   5.8%  
1965 5.9% 4.0% 1.9%   6.5%  
1966 7.3% 3.8% 3.5%   6.6%  
1967 6.8% 3.8% 3.0%   2.7%  
1968 8.1% 3.4% 4.7%   4.9%  
1969 9.7% 3.5% 6.2%   3.1% Richard Nixon
1970 11.7% 6.1% 5.6% Recession 3.3%  
1971 9.3% 6.0% 3.3%   3.3%  
1972 8.6% 5.2% 3.4%   5.2%  
1973 13.6% 4.9% 8.7% Recession 5.6%  
1974 19.5% 7.2% 12.3% Recession -0.5% Gerald Ford
1975 15.1% 8.2% 6.9% Recession -0.2%  
1976 12.7% 7.8% 4.9%   5.4%  
1977 13.1% 6.4% 6.7%   4.6% Jimmy Carter
1978 15.0% 6.0% 9.0%   5.6%  
1979 19.3% 6.0% 13.3%   3.2%  
1980 19.7% 7.2% 12.5% Recession -0.2%  
1981 17.4% 8.5% 8.9% Recession 2.6% Ronald Reagan
1982 14.6% 10.8% 3.8% Recession -1.9%  
1983 12.1% 8.3% 3.8%   4.6%  
1984 11.2% 7.3% 3.9%   7.3%  
1985 10.8% 7.0% 3.8%   4.2%  
1986 7.7% 6.6% 1.1%   3.5%  
1987 10.1% 5.7% 4.4%   3.5%  
1988 9.7% 5.3% 4.4%   4.2% George H.W. Bush
1989 10.0% 5.4% 4.6%   3.7%  
1990 12.4% 6.3% 6.1% Recession 1.9%  
1991 10.4% 7.3% 3.1% Recession -0.1%  
1992 10.3% 7.4% 2.9%   3.6%  
1993 9.2% 6.5% 2.7%   2.7% Bill Clinton
1994 8.2% 5.5% 2.7%   4.0%  
1995 8.1% 5.6% 2.5%   2.7%  
1996 8.7% 5.4% 3.3%   3.8%  
1997 6.4% 4.7% 1.7%   4.5%  
1998 6.0% 4.4% 1.6%   4.5%  
1999 6.7% 4.0% 2.7%   4.7%  
2000 7.3% 3.9% 3.4%   4.1%  
2001 7.3% 5.7% 1.6% Recession 1.0% George W. Bush
2002 8.4% 6.0% 2.4%   1.8%  
2003 7.6% 5.7% 1.9%   2.8%  
2004 8.7% 5.4% 3.3%   3.8%  
2005 8.3% 4.9% 3.4%   8.3%  
2006 6.9% 4.4% 2.5%   2.7%  
2007 9.1% 5.0% 4.1%   1.8%  
2008 7.4% 7.3% 0.1% Recession -0.3%  
2009 12.6% 9.9% 2.7% Recession -2.8% Barack Obama
2010 10.8% 9.3% 1.5%   2.5%  
2011 11.5% 8.5% 3.0%   1.6%  
2012 9.6% 7.9% 1.7%   2.2%  
2013 8.2% 6.7% 1.5%   1.7%  
2014 6.4% 5.6% 0.8%   2.6%  
2015 5.7% 5.0% 0.7%   2.9%  
2016 6.8% 4.7% 2.1%   1.5%  
2017 6.2% 4.1% 2.1%   2.4% Donald Trump
2018 6.3% 3.9% 2.4%   2.9%  
2019 5.3% 3.5% 1.8%   2.3%  

Harry Truman (1945-1953). The misery index began at 4.1%, rose to 22% after the end of World War II brought in a recession. Truman knocked it down to 4.5% with the Employment Act and the Fair Deal. By sending aid to Europe, the Marshall Plan created demand for U.S. goods. In 1950, the Korean War created inflation, raising the misery index to 10.2%. By the end of Truman's term, the misery index had fallen to 3.5%.

Dwight Eisenhower (1953-1962). A recession following the end of the Korean War sent the misery index to 5.2% during Eisenhower's first year. It rose to 8.1% when another recession hit. That high level of misery helped John F. Kennedy win over the incumbent party's vice-president, Richard Nixon.

John F. Kennedy (1961-1963). Kennedy ended the recession, but unemployment remained high by the time he was assassinated in 1963. The misery index remained around 8.0%.

Lyndon B. Johnson (1963-1969). Johnson reduced the index to 5.9% in 1965 with spending on the Great Society and the Vietnam War. It rose to 8.1% by the end of his final full year in office.

Richard Nixon (1969-1974). The index rose to 11.7% by the end of 1970. Nixon created the Emergency Employment Act and wage-price controls to reduce unemployment and inflation. Instead, it created stagflation by slowing growth. Inflation rose as the Federal Reserve alternately raised interest rates to control inflation, then lowered them to spur growth. That confused businesses, which kept prices high. By 1973, the misery index had risen to 13.6%. Nixon ended the gold standard, which made inflation even worse as the dollar's value plummeted. He ended the Vietnam War but resigned because of the Watergate investigation. 

Gerald Ford (1974-1977). The index rose to 19.5% during Ford's first year thanks to worsening stagflation. The index fell to 12.7% in 1976 once the recession ended.

Jimmy Carter (1977-1981). The index rose to 19.7% in 1980. The Fed raised interest rates to end inflation once and for all. It created a recession.

Ronald Reagan (1981-1988). In 1982, Reagan signed the Jobs Act and the Garn-St. Germain Act to reduce regulations on savings and loans. He increased military spending. In 1986, he cut taxes. The expansion reduced the misery index to 7.7%. In 1987, Black Monday increased the index to 10.1%.

George H.W. Bush (1988-1993). The S&L Crisis sent the misery index to 12.4% in 1990. Bush launched Desert Storm, bringing the index down to 10.3%.

Bill Clinton (1993-2001). NAFTA boosted growth, Clinton also signed the Balanced Budget Act, the School to Work Act, and welfare reform. All of these actions boosted economic growth, sending the misery index down to 6.0% by 1998. Inflation began rising, increasing the index to 7.3% by the end of Clinton's last full year in office.

George W. Bush (2001-2009). The year before Bush took office, the NASDAQ hit record highs. When the bubble burst, Bush inherited a recession. He responded with the Bush tax cuts. He responded to the 9/11 attacks with the War on Terror. The attacks worsened the recession, which he addressed with the 2003 JGTRRA tax cuts and the 2005 Bankruptcy Act. But Hurricane Katrina slowed growth. In 2008, the financial crisis hit. But the index remained at 7.6% by the end of Bush's last full year in office because unemployment had not started escalating yet. 

Barack Obama began his presidency on the tail end of the 2008 recession. The misery index shot up to 12.6% at the end of 2009, despite the America Recovery and Reinvestment Act (ARRA) and the extension of unemployment benefits. However, the economy slowly healed, so that by 2015 the index had fallen to 5.7%.

As Donald Trump assumed the role of president, the misery index was in a decline due to a lowering unemployment rate and a low rate of inflation. In 2019 the annual inflation rate was 1.8%, and the seasonal employment rate in December was 3.5%, leading to an ideal misery index of 5.3%. 

However, this changed in early 2020 when the coronavirus pandemic was declared. The U.S. issued a state of emergency, closing businesses and stores. Unemployment rose to 14.7%, while inflation dropped to .3% in April. Unemployment caused the misery index to rocket to 15.0% for that time. 

Misery Index History

Economist Arthur Okun created the misery index in the 1970s. The former Yale professor had also been a member of President Lyndon B. Johnson's Council of Economic Advisors. He wanted to describe the combined effect of high unemployment and inflation prevalent at that time.

After the index was developed, the misery index for the Great Depression was calculated. It exceeded 20% because the unemployment rate was so high. In 1944, the misery index exceeded 20% again because inflation was so high. It almost reached 20% again in 1979 and 1980 as a result of stagflation. That's an unusual combination of high inflation and slow economic growth that creates high unemployment.

Misery Index Flaws

The misery index remained high after several recessions ended. Unemployment is a lagging indicator, so it often doesn't recede until long after the economy improves. That happened during the recessions of 1945, 1949, 1957, 1990-1991, 2001, and the 2008 financial crisis.

The index remained in the double digits through most of the recessions of 1970, 1973-1975, and 1980-1981. These were driven by a type of inflation called galloping inflation, which is when inflation rises more than 10%.

Article Sources

  1. Brookings. "The Brookings Institution’s Arthur Okun – Father of the 'Misery Index'." Accessed Sept. 12, 2020.

  2. Frederic B. Hill and Stephens Broening. "The Life of Kings: The Baltimore Sun and the Golden Age of the American Newspaper," Page 170. Rowman & Littlefield, 2016.

  3. Federal Reserve Bank of St. Louis. "The Fed’s Inflation Target: Why 2 Percent?" Accessed Sept. 12, 2020.

  4. Federal Reserve History. "Employment Act of 1946." Accessed Sept. 12, 2020.

  5. U.S. Bureau of Labor Statistics. "Civilian Unemployment Rate, Seasonally Adjusted." Accessed May 31, 2020.

  6. Federal Reserve Bank of Minneapolis. "Consumer Price Index, 1913-." Accessed May 31, 2020.

  7. U.S. Bureau of Labor Statistics. "Consumer Price Index for All Urban Consumers (CPI-U): U.S. city average, by Expenditure Category, April 2020." Accessed May 31, 2020.