Economic think tank the Peterson Institute tracks a measure they call the “augmented misery index” that combines inflation, unemployment, and housing prices to provide a sense of just how awful our economy is doing. A higher score on the index indicates high inflation, high unemployment, and low housing prices.
Last week they released a revised score for the first six months of this year and it wasn’t pretty. The economy in the first half of 2011 wasn’t quite as bad as during the worst of the recession in 2008 and 2009, but it was worse than it’s been since the mid-2009. And things have only declined since the end of June – the debt downgrade, stock market turmoil, and little good news on jobs.
The authors offer predictions for the rest of 2011: lower inflation, but continued slow economic growth and thus little reduction in the unemployment rate. The augmented misery index will drop but nowhere near pre-Recession levels. All of this does not, they conclude, look good for President Obama’s reelection prospects. No president since FDR has been reelected when unemployment was over 7.2% (it averaged 9.0% in the first half of 2011).
What Does the Augmented Misery Index Say about President Obama’s Election Prospects?
Peterson Institute // Gary Clyde Hufbauer & Julia Muir // August 16th, 2011