When it comes to measuring the combination of unemployment and inflation, it doesn’t get much more miserable than this.
In fact, misery, as measured in the unofficial Misery Index that simply totals the unemployment and inflation rates, is at a 28-year high, reflective of how weak the economic recovery has been and how far there is to go.
The index, first compiled during the soaring inflation days of the 1970s by economist Arthur Okun, is registering a nausea-inducing 12.7—9.1 percent for unemployment and 3.6 percent for annualized inflation—a number not seen since 1983. The index has been above 10 since November 2009 and had been under double-digits from June 1993 through May 2008.
But, President Reagan in the 1980’s had a plan to wring the misery out of the economy (created by President Jimmy Carter’s economic policies) – cuts in government spending, tax reform and tax cuts. Plus, Paul Volcker’s tight money policy at the Fed helped control inflation. I remember the high inflationary price pressures, high gold prices and rampant real estate speculation – plus, the gasoline lines under Carter.
Reagan won the election in 1980 with his plan to right the economy.
Without these policy changes and a dramatic improvement of the economy, Reagan would NOT have been re-elected in 1984.
President Obama knows what has worked in the past. He simply doesn’t believe these measures will work because of his political ideology of tax and redistribution of wealth.