U.S. ‘Misery Index' Climbs to 15-Year High on Prices
By Timothy R. Homan
Misery hasn't had this much company in more than 15 years.
The jump in consumer prices reported today by the Labor Department means the so-called Misery Index, the sum of the unemployment and inflation rates, is the highest since President Bill Clinton took office in January 1993. The measure, created by Arthur Okun, an economics adviser to President Lyndon Johnson, rose to 10.5 in June from 9.7 in the prior month.
Surging costs and falling payrolls will cause consumers to slow spending growth to the weakest pace since 1991 by the fourth quarter, according to a monthly survey of economists by Bloomberg News. The figures underscore Federal Reserve Chairman Ben S. Bernanke's comment to lawmakers yesterday that U.S. households are under ‘‘tremendous pressure.''
‘‘You add that to what's going on with home prices and that's just a huge stress on consumers,'' said Robert Dye, senior economist at PNC Financial Services Group Inc. in Pittsburgh.
The year-over-year inflation rate accelerated to 5 percent, the fastest since May 1991, the Labor Department said. A separate report July 3 showed a 5.5 percent unemployment rate for June.
Today's consumer price index data also showed wages fell 2.4 percent over the last 12 months, after adjusting for inflation.
‘‘Both sides of stagflation are in greater evidence this week than they've ever been before,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York.
The June unemployment rate held at 5.5 percent after soaring the most in two decades in May from April's 5 percent.
The Misery Index peaked in June 1980, when the jobless rate reached 7.6 percent and consumer prices rose 14.4 percent.