A New Kind of Misery Index?
11.84 is the current level of our “misery index” if we use what Arthur Okun (economic advisor to Lyndon Johnson) created. November unemployment + inflation rates = 11.84.
However, according to Floyd Norris, a new index might be more appropriate. Suggested by Pierre Chilleteau, it combines a nation’s budget deficit as a percent of GDP with its unemployment rate.
The Economic Lesson
A misery index reflects an economic dilemma. Each has a different opportunity cost for less unemployment. Each requires a tradeoff. For Okun, if we solve unemployment, we get more inflation (or the opposite). For Chilleteau, a Keynesian solution to unemployment means an even higher budget deficit or less spending means (Keynes again) more unemployment.