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The Twin Evils of Inflation and Unemployment
Inflation and unemployment are two variables that governments monitor carefully. Nearly every country has experienced periods of very high unemployment or inflation at some point in its past, and government policies used to correct these problems vary significantly.
Do Unemployment and Inflation Measure Our Misery?
The Misery Index was created by economist Arthur Okun, an adviser to President Lyndon Johnson. It is the sum of the unemployment and inflation rates. The higher the number, the more misery the economy is suffering. Running against Gerald Ford for the presidency in 1976, Jimmy Carter made an issue of the Misery Index: It was 13%. He argued that no one should be reelected as president when the Misery Index is that high. When Carter sought reelection in 1980, the Misery Index exceeded 20%; he lost to Ronald Reagan.
The Misery Index was created by economist Arthur Okun, an adviser to President Lyndon Johnson. It is the sum of the unemployment and inflation rates. The higher the number, the more misery the economy is suffering. Running against Gerald Ford for the presidency in 1976, Jimmy Carter made an issue of the Misery Index: It was 13%. He argued that no one should be reelected as president when the Misery Index is that high. When Carter sought reelection in 1980, the Misery Index exceeded 20%; he lost to Ronald Reagan.
The social costs of unemployment: For every 1% rise in the national unemployment rate:
$30 billion more is spent by the government on unemployment benefits per year.
$6 billion more is spent on food stamps (SNAP benefits) per year.
$12 billion less is collected in federal and state income tax revenues.
Public Domain
The Zimbabwean $100 trillion bill was one of the largest denominations of currency ever printed. It became nearly worthless just months after it was printed.
The cost of tuition at public and private colleges and universities has risen faster than the consumer price index for all goods and services since 2001. (Index = 100 in year 2001.)
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Housing prices rose quickly from 2001 to 2006, then fell dramatically from 2006 to 2012. Prices have since rebounded.