Oh-bama, You Are on the Way to Create History

Economist Okun created the “misery index” by adding the unemployment rate to the inflation rate. Economist Barro went even further by adding the bank rate and GDP, however, for all sense and purposes today’s misery index is one of inflation rate and added unemployment rate.

Forty years back, President Carter was run out the (White House) office, literally. When Carter left office, the “misery index” (excluding GDP and bank rate) ranked highest since records were kept, at 19.72. Currently, President Obama is well under way to actually beat that mark. Effective January 2009, Obama inherited a low unemployment rate coupled with low Inflation and a misery index of 7.83. Currently, that index stand at 12.97 and climbing due to a CPI index of 0.3% in September, and on the heels of a 0.4% increase in the prior month.

Given our current economic situation, market conditions are not expected to improve drastically, since the price of a barrel of oil remains above $91 and having a weak US dollar. Further, the unemployment rate does not seem to budge, remaining at a high 9.1% and even higher when using table A-16, U-6 , also referred to as the “actual” unemployment rate at 16.5%.

Within the “new era”, (following WWII), President Reagan managed the best job, decreasing the unemployment rate + inflation rate by almost 10 percentage points, going from an inherited 19.33 on January 1981 to 9.72 at end of 1988.

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