Friday, May 13, 2011

Shadow Stat Misery Index Highest on Record

John Williams, over at Shadow Stats, compiles economic data for inflation and unemployment the way it used to be calculated pre-1990. Based on that data, the CPI inflation rate is over 10%, and the unemployment rate is over 15% (see charts). The Misery Index is the sum of the current inflation rate and the unemployment rate.  If it were to be calculated using the older methods, the Index would now be over 25, a record high. It surpasses the old index high of 21.98, which occurred in June 1980, when Jimmy Carter was president. Most believe the height of the Index along with the Iranian hostage crisis is what caused Carter to lose his re-election bid.





Using current calculation methods, April unemployment came in at 9.0% and the annualized April CPI number came in at 4.8%, for a Misery Index reading of 13.8.

The last time the Index came in with a higher reading with this index reading was in March 1983, with a reading of 13.90.

13 comments:

  1. Desolation JonesMay 14, 2011 at 3:56 AM

    "John Williams, over at Shadow Stats compiles economic data for inflation and unemployment the way it used to be calculated pre-1990. Based on that data, the CPI inflation rate is over 10%"

    That's how it's usually advertised, but it actually isn't calculated the way it's implied.

    http://www.econbrowser.com/archives/2008/10/shadowstats_res.html

    "I'm not going back and recalculating the CPI. All I'm doing is going back to the government's estimates of what the effect would be and using that as an ad factor to the reported statistics."

    An ad factor? Some methodology! That's hardly "the way it used to be calculated pre-1990."

    Also, when nominal GDP is growing less than 5%, it's hard to make the case that we're experiencing 70s style inflation when nominal GDP was agrowing at 10-15% during that time. The implication is that despite around 20% population growth, using the shadowstats numbers, we're producing (real gdp) less today than what we were 20 years ago. Do you really believe that?
    http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

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  2. I think you have few mistakes here.

    i) There is same chart twice (unemployment chart + unemployment chart). I think there should be two diffrent charts (unemployment chart + inflation chart).

    ii) I think you have misery index wrong. Using SGS Alternate data I get unemployment ~22% and inflation ~11%. So I get misery index (22+11=) ~33.

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  3. Last time I looked, 33% was over 25%, I just eyeballed the numbers from the chart and by stating above 25% just wanted to be conservative, given there is no exactness to these numbers anyway. It looks like you took a ruler out and held it against the screen to get a different approximation. Congratulations. But as far as I am concerned, this would be like me calling you out for using the word "few" when you a "couple"

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  4. For a quick and dirty measurement of how an economy is doing, simply hang a counter over a lane or two of a metropolitan arterial road and count the vehicles passing by underneath during rush hour.

    Notwithstanding the governments ever optimistic pronouncements, I'm finding my commute, morning and evening, to be getting easier, not harder.

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  5. John Williams has also been predicting hyperinflation is just around the corner for a while now. Google it, in December of 2009 he guaranteed it was coming in the next year; in December of 2010, within the next few months.

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  6. John Williams has 10% inflation -- seems about right to me. Read the primers if you have any doubt.

    Industrial metals - I watch Copper besides oil and precious metals are going up rapidly.

    Blame the messenger?

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  7. You said:

    John Williams has also been predicting hyperinflation is just around the corner for a while now. Google it, in December of 2009 he guaranteed it was coming in the next year; in December of 2010, within the next few months.

    I don't think that's accurate. You would want to reference his Hyperinflation Report, which I have the several recent copies of. His wording is much more guarded and acknowledges the many factors at work. Still, it's correct to say that he believes America is headed for hyperinflation.

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  8. Currently, "core" CPI strips out the volatile food and gas prices, but includes the housing market, weighted at 43%. With housing in the dumps, no wonder "inflation" is so low; everywhere except at the cash register.

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  9. This guy sounds like a TV Evangelist I once saw on a show. He's been predicting the end of the world since the 60's. Maybe one day he'll get it right too.

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  10. Desolation JonesMay 16, 2011 at 10:38 PM

    Bob Sather, CPI has owners' equivalent rent (which hasn't fallen much at all because it remained stable during the housing boom), not house prices. If house prices were in cpi, it would be much much lower.

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  11. Wenzel, when people talk about numbers as small as two digits, when they say 'over x', they mean very closely within the range of. 33-34% is not relatively close in enough within the range of 25% to merely be considered 'over 25'. Over 30% would have been more accurate and tolerable. When someone says 'Over 25% percent', especially since we're talking PERCENTAGES, not large numbers, I take it to mean 'decimal points over 25%. Like I said, percentages aren't spoken of in relativistic terms the same way a big numbers are, like say number by the thousands where measurement marks are made every 500 (IE over 1,000/1,500/2,000/so on). When you talk percentages, you generally get as close to the actual number as is possible.

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  12. Reading the above arguments about the numbers is like arguing whether an individual fell into a fifteen foot hole or a seventeen foot hole. In
    either instance, there is one hell of a lot of diggin out to be done.
    Liberal Democrats have stooped so low, they are now arguing in this manner, while the citizens in the hole are trying to find their way to daylight.
    Can they even lower their expectations or goals even more?

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  13. True, but when you calculate nominal inflation anomolies adherent to recent trend data you get a completely differnt picture. Take in account the misery index when based on inflation rates of post WWII against the diametry of caustic analasy than you get a much clearer picture. It's like mixing lemonade with soda and drinking it after you brush your teeth. If that helps at all.

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