Misery – a scary movie, but a not so scary index (at least as of today)
Kathy Bates justifiably won the Best Actress Oscar for her portrayal of former nurse Annie Wilkes in the 1990 psychological horror film Misery, based on Stephen King’s 1987 novel of the same name. If you haven’t seen the movie, our advice is DON’T! It – and Ms. Bates in particular – are terrifying!
Misery the movie got us thinking about Misery the index, which fortunately isn’t all that scary, at least as of today. The Misery Index was created by economist Arthur Okun who believed that combining the seasonally adjusted unemployment rate with the annual inflation rate would provide a pretty good snapshot of how the average citizen was doing economically. Not surprisingly, low unemployment and low inflation are a good thing; elevated unemployment and elevated inflation are a bad thing.
Well, as we confront volatile markets and worries of a trade war driven downturn, it is worth noting that the Misery Index sits at just 5.60, the result of a 3.6% unemployment rate – the lowest in 50 years – and an inflation rate of 2.0%, as measured by the Consumer Price Index, a far cry from the high-teens Index readings of the late ‘70s (see the chart below). There were a lot of great things about the 1970s, but the Misery Index wasn’t one of them!
Like any economic indicator, the Misery Index has its flaws (e.g. deflation would push it lower, but as we know deflation – a sustained drop in prices – is typically not an economic positive), but for now, the Misery Index reflects a US economy marked by low unemployment and modest inflation, and there is nothing scary about that!
The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a registered investment advisor.
Chart source: Misery Index US
Tagged: Tim Holland, weekly wire, Misery Index, market perspectives