pjmedia.com Each month economists attempt to gauge how average Americans are weathering the ups and downs of the U.S. economy. By using the simple yet clever technique of adding the U.S. unemployment rate (4.8%) to the current rate of inflation (6.22%) economists quantify the economic well-being of the country into a Misery Index. The current U.S. Misery Index stands at 10.82%.
But what exactly does the Misery Index tell us? First, we know that as the rate of inflation goes up, the cost of living increases. Next, as the unemployment numbers rise, more and more people fall into poverty. Consequently, the Misery Index acts as a kind of shorthand or metric with which to gauge the health of the economy as a whole since both employment and inflation impact the average American wage earner.
Inflation erodes the purchasing power of the consumer. Higher prices mean fewer goods can be purchased. In other words, even as Americans get back to work after the disruptions of the pandemic, their wages, savings, and investments buy less and less, not because they’ve done anything wrong, but because of the mere passage of time increasing the prices of goods and services such as housing, food, and transportation. Life simply becomes more and more expensive.
