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Kerry’s “Misery Index” Accentuates the Negative

Kerry invents a new 'Misery Index.' The old one makes Bush's tenure look better than most.


Kerry’s campaign has invented a new “misery index” that makes Bush’s economic record look, well, miserable. Why a new index? Perhaps because the classic “misery index” —  which adds together the unemployment rate and the rate of inflation — currently is better than it’s been in most years since World War II. In fact, it’s less than half the miserable level reached in 1980, the last year of the Carter administration, and better than in any of Clinton’s first four years:


Source: Bureau of Labor Statistics. (Annual Average Unemployment Rate + Percentage Change in Annual Average Consumer Price Index).


The original “misery index” is simply the jobless rate added to the inflation rate. The term was coined by economist Arthur Okun, an economic adviser in Lyndon Johnson’s administration. It was widely used during the “stagflation” of the ’70s and ’80s when stagnant economic growth kept unemployment high and inflation reduced the buying power of wages.

By that classic misery measure the country is faring better than average under Bush: the unemployment rate for March was 5.7% — which is just 0.1% above the average for all months since 1948. And the inflation rate remains historically low – the Labor Department’s Consumer Price Index rose only 1.7% in the 12 months ending in February, the most recent month on record. So the classic “misery index” number is currently 7.4.

That’s lower than it’s been in all but 20 of the previous 56 years on record. It never got this low during any of the years under Richard Nixon, Jimmy Carter, Ronald Reagan or Bush’s father.

And the classic “misery index” was higher in every one of Clinton’s first four years than it has been in any of Bush’s years. It was not until Clinton’s second term that the long economic boom of the 1990’s pulled the index down to below its current level.

Source: Bureau of Labor Statistics. (Annual Average Unemployment Rate + Percentage Change in Annual Average Consumer Price Index)

(Note: Kerry’s advisers say presidents should be judged by the change in the index, not its absolute level. Under Clinton the index did improve significantly: it was 10.5 the year before he took office and nearly 30% lower in his final year. It worsened under Bush but currently has settled down to the same level as it was in Clinton’s last year. Unemployment is worse but inflation is lower by the same amount.)

Kerry’s New “Misery Index”

So it’s not surprising that the Kerry campaign has come up with another way of looking at the economy. On April 12 Kerry issued a news release saying “Middle-Class Misery Hits Record Under George Bush,” based on a new index put together by former Clinton economic adviser Gene Sperling and former Al Gore adviser Jason Furman.

The Kerry index is, to put it mildly, selective.

Rather than use all consumer prices, the Kerry index cherry-picks three items that have gone up faster than the overall rate of inflation: college tuition (at public four-year universities only), gasoline, and health care.

And rather than use the overall unemployment rate — which was 5.5% at this point in Clinton’s first term, only two-tenths of one percent lower than now — Kerry has used the number of jobs, which produces a more negative picture.

Other statistical indicators chosen by Kerry are median family income and bankruptcies, which have both worsened under Bush, and home ownership — the only one of the seven indicators in the Kerry index to show improvement.

A Dubious “Record”

The Kerry news release proclaimed that the new index under Bush shows “the largest three-year fall on record and the worst record of any president ever.” But look closely: their own calculations don’t back that up. The “record” only goes back to 1976, when some of the statistics Kerry uses were first collected. The 13-point drop that the Kerry advisers calculate for Bush is indeed the worst in that relatively brief 28-year period, but they can’t call it the worst “ever.” What about Herbert Hoover?

In a telephone conference call with reporters Sperling denied that the items in Kerry’s index were selected just to make Bush look bad. Asked why the Consumer Price Index wasn’t used, Sperling said the prices of gasoline, health-insurance premiums and college tuition were chosen because they are “the major things people see and feel.” And Furman pointed out that the index generously includes one statistic that has shown improvement: home ownership, which has increased to 68.6% of all households since Bush took office, according to the Census Bureau. That’s an increase of 1.1 percentage points and is due in part to record low mortgage rates.

But elsewhere the Kerry index selects those figures that look the worst. It includes median family income before taxes, for example. But that doesn’t measure the typical family’s take-home pay as well as the Census Bureau’s measure of after-tax income. Worth noting is that the Center on Budget and Policy Priorities — a liberal group often at odds with Bush’s policies — issued a report April 12 saying that the federal tax burden on the typical middle-income family of four was at its lowest level in decades. The Kerry index reflects none of the benefit of the Bush tax cuts. After-tax income has fallen, but not by as much as income before taxes.

Contributing the most to the gloomy picture presented by Kerry’s index is college tuition. Kerry aides used only the figure for four-year public colleges and universities, which has shot up 13% under Bush, even after adjusting for inflation. But they excluded tuition for private colleges and universities, which went up only 5%. (Both figures are from the College Board’s annual survey of college costs.)

When it came to measuring the change in employment, however, the Kerry aides focused on the loss of private sector jobs only, not total employment. That ignored gains in hiring of local, state and federal workers. The economy has lost 2.6 million private-sector jobs since Bush took office, but government hiring has kept the total job loss to just 1.8 million. The Kerry index uses the larger figure, making their index look worse.

Kerry isn’t the only one spinning economic figures, of course. We pointed out earlier a Republican attempt to claim that after-tax income was up when the Census Bureau reported it was down. Our advice: be wary of all politicians spouting economic statistics.



John Kerry for President, “Record Deterioration in the Middle-Class Misery Index” Press Release 12 April 2004.

US Census Bureau, Housing Vacancy Survey: Fourth Quarter 2003Table 5: Homeownership rates for the United States: 1965 to 2003” 3 Feb 2004.

Center on Budget and Policy Priorities, “Federal Tax Burdens Generally at Lowest Levels in Decades,” 12 April 2004.

The College Board, “2003 Trends in College Pricing” Sept 2003.