Colman: ARE YOU MISERABLE?

Remember the Misery Index?  It was made famous in 1980 when Ronald Reagan used it against Jimmie Carter—the worst president in American history—until Barack bumbled onto the scene.

The Misery Index is the sum of the inflation rate and the unemployment rate.  For example, if the inflation rate is three percent and the unemployment rate is five percent, the Misery Index is eight. 

     Since 1950, the Misery Index (or MI) has fallen to five or below only four times.  And three American presidents were involved.  Can you name them?  Here is a hint:  Two of them were Harry Truman, a Democrat, and Dwight Eisenhower, a Republican.”

But how does Trump add up—with only one year in office?

Currently, in late February 2018, the MI is six, and Donald Trump, a Republican, is the president. 

     The MI does not tell the whole story of the American economy.  There are more indices than those for inflation and unemployment. 

     Other factors that influence economic performance are the actions of the Federal Reserve, tax rates, the size of a president’s budget, and whether that budget shows a surplus or a deficit.”

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ARE YOU MISERABLE?

By Richard Colman, California Political News and Views, 2/28/18

     Does anyone remember the Misery Index?   

     The Misery Index is the sum of the inflation rate and the unemployment rate.  For example, if the inflation rate is three percent and the unemployment rate is five percent, the Misery Index is eight. 

     Since 1950, the Misery Index (or MI) has fallen to five or below only four times.  And three American presidents were involved.  Can you name them?  Here is a hint:  Two of them were Harry Truman, a Democrat, and Dwight Eisenhower, a Republican.  Who is the third?  Read on. 

     Since the end of World War II, there have been several periods of boom.  There was the post-war boom of 1946 to 1953.  There was another boom from 1954 to mid-1957. 

     The next boom went from 1964 to 1969, a period involving the Vietnam War. 

     The next real boom went from 1983 to 1989, when Ronald Reagan, a Republican, was president.  There was no war.  But military spending was high, leading one observer to comment that under Reagan the nation got war-time spending without a war. 

     Following that Reagan boom, there was another boom from 1995 to early 2000.  Bill Clinton, a Democrat, was the president. 

     Perhaps another boom has begun, going from 2016 to the present time. 

     What can one say about the Misery Index? 

     In 1952, during the Korean War, the MI fell below five.  Truman was the president.  In 1954, after the Korean War ended, the MU fell below five again, when Eisenhower was the president. 

     Eisenhower was still president in 1956, the MI again fell below five. 

     For the 1950-2018 interval, the MI reached an all-time high of 22 in 1980, when Jimmy Carter’s presidency was ending.  In 1988, when Reagan was about to leave office, the MI dropped to eight. 

     Now, who was the president when the MI, for the last time between 1950 and the present time, reached five?  The year was 2016, and the president was Barack Obama, a Democrat.  In  2016, the MI was equal to five exactly. 

     Currently, in late February 2018, the MI is six, and Donald Trump, a Republican, is the president. 

     The MI does not tell the whole story of the American economy.  There are more indices than those for inflation and unemployment. 

     Other factors that influence economic performance are the actions of the Federal Reserve, tax rates, the size of a president’s budget, and whether that budget shows a surplus or a deficit. 

     In 1837, when Andrew Jackson, a Democrat, left the presidency, there was no national debt.  It took 144 years (1937 to 1981) to go from no debt to a debt of $1 trillion. 

     In 1981, when Reagan was president, the debt reached $1 trillion.  By the time Reagan left office in January 1989, the debt was about $3 trillion. 

     From 1989 to the present time, the debt reached $20 trillion.  About $10 trillion of that $20 trillion occurred under Obama’s presidency. 

     Perhaps the size of the national debt and the MI have no connection.  But when a country has a debt is must sell bonds to people and nations who wish to buy that debt. 

     So far, the debt has not impaired the American economy.  But what would happen, perhaps tomorrow, if the purchasers of debt stopped buying?  Interest rates would have to go up to attract buyers of bonds.  And when interest rates go up — and they have been going up for the last few months — then the cost of borrowing money for homes, cars, and other expenses rises.  Eventually, if interest rates go high enough, unemployment, especially among construction and auto workers, goes up. 

     Trump has been fortunate so far.  Unemployment nationally is 4.1 percent.  But inflation is rising and is now at annual rate of 6 percent.  Thus, the current MI is over 10. 

     Currently, the Democratic Party has basically been talking about caring for illegal aliens and their children.  If a recession begins, the Democrats will have something else to say. 

     Trump should be very careful.  The return of significant inflation would add to his personal Misery Index as well as the MI of most Americans.

 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.