Just how miserable do you feel these days?
When it comes to North America’s economic outlook, things do look rather gloomy right now. If you have any doubts, have a look the Misery Index.
Like the dreaded wind chill factor, the index takes unpleasant facts of life – unemployment and inflation – tries to gauge just how bad they make people feel. It’s a U.S. measure but the Canadian picture isn’t that much better.
Right, now the index is at a 28-year high, reflective of how weak the economic recovery has been and how bleak the future looks to many people.
In fact, the index, first compiled during the runaway inflation days of the 1970s by economist Arthur Okun, is registering a nausea-inducing 12.7 — 9.1% for unemployment and 3.6% for annualized inflation.
The trouble with all such measures is that they assume everyone is in the same boat — which they’re clearly not. In fact, your own personal Misery Index could be even higher.
Some would also argue that the misery index is only relevant if you assume that the two components have equal impact — which they clearly don’t.
10% unemployment and 1% inflation would result in the same misery index as 1% unemployment and 10% inflation. But somehow I doubt you’d be "equally miserable" under either of these scenarios.
How are you feeling right now? Is your personal Misery Index sky high or have you found a way to look at things differently?
By Gordon Powers, MSN Money