Diverging Employment Indices and Politics

When President Jimmy Carter was running against President Gerald Ford in 1976, the economy was by most standards doing very poorly, and Carter wanted to focus on this condition to make his case for the presidency. In the process, he coined the term "misery index." Typically, unemployment and inflation tend to run in counter cycles with one running higher, while the other runs lower. In the 1970's, we suffered under both high inflation and high unemployment and the sum of the two is what Carter defined as the misery index. Carter's new index had a saliency because it was easy to understand and it reflected the sad concurrent economic experience of most people.

Carter inherited an historically high misery index in the low teens from Ford, but managed to steer the economy into a misery index over twenty before handing over to President Reagan an economy at a misery index in the high teens. The misery index plummeted thoughout Reagan's two terms. Reagan's second term ended at the post-war average of ten for the misery index. We have either been just a little over ten or substantially below that figure since then. Indeed, the first four years of George W. Bush's Administration had a lower misery index than President Bill Clinton's first four years.

The current misery index is about where it was when Bush took office despite an inherited recession and the attacks of September 11. The current inflation rate of about one percentage point less than is less than the post-war mean of 4.4% and the current unemployment rate of 5.5% is less than the post-war average of 6.4%

Under these conditions, the traditional misery index was useless as a political bludgeon to go after Bush. Hence, Democratic presidential candidate John Kerry yielded to the temptation to conjure up a new misery index. Kerry's index was so contorted and convoluted that it made Jimmy Carter's record of double digit inflation and double digit unemployment (and should we add double-digit interest rates) appear to be better than our current, comparatively benign circumstances. Not even Democratic partisans bought into the index because it was more likely to highlight Kerry's intellectual dishonesty than it was to persuade people that Carter's economic experience of the 1970's was to be preferred. Voters were not convinced in 1980 that the economy was doing well when they dumped Carter in a landslide and they were not likely to be convinced that conditions are worse now.

Go To Page: 1 2 3