Sunday, September 14, 2008

The Return of the Misery Index

It's unfortunate that the misery index is rising, but it certainly improves Obama's chances:

During the last 13 presidential election campaigns, from 1956 through 2004, both the short- and long-term changes in the misery index showed the economy was improving in four campaigns — 1964, 1984, 1988 and 1996 — and both short- and long-term changes showed the economy was worsening in four others —1960, 1968, 1980 and 1992. The incumbents held on when the signal was positive and lost when it was negative.

In the other five elections, the signals were mixed. In those years, the White House changed hands twice and was held by the incumbent party three times.

This year both the short- and long-term signals will be negative, which would seem to favor the Democrats. But there is one major difference this time. In all the elections in which the index forecast the outcome, the incumbent party nominated the sitting president or vice president.

This year, it was Senator John McCain, the Republican nominee, who ran a commercial saying that people were worse off than four years ago, and promised to bring changes. “On the face of it,” said Robert Barbera, the chief economist of ITG and the man who suggested I look at the misery index, “both candidates are running against the incumbent party.”

That has frustrated the Democrats, who no doubt will do their best to tie Senator McCain to the record of President Bush.


September 13, 2008

Off the Charts

The Return of the Misery Index

IT has been almost three decades since the term “misery index” gained political currency, as President Jimmy Carter confronted the twin problems of rising inflation and unemployment. Now that almost-forgotten index is rising more rapidly than at any time since Mr. Carter’s last year in office — 1980.

The index is the sum of the unemployment rate and the inflation rate over the preceding 12 months. In normal times, the two indexes are likely to move in different directions, with inflation easing when unemployment rises, and climbing as the economy gets stronger and unemployment ebbs.

This year, however, both have been rising.


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