{"id":231925,"date":"2024-06-13T17:33:28","date_gmt":"2024-06-13T17:33:28","guid":{"rendered":"https:\/\/michigandigitalnews.com\/index.php\/2024\/06\/13\/misery-and-modified-misery-econbrowser\/"},"modified":"2025-06-25T17:17:12","modified_gmt":"2025-06-25T17:17:12","slug":"misery-and-modified-misery-econbrowser","status":"publish","type":"post","link":"https:\/\/michigandigitalnews.com\/index.php\/2024\/06\/13\/misery-and-modified-misery-econbrowser\/","title":{"rendered":"Misery and Modified Misery | Econbrowser"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<p>Conventional and Instantaneous<\/p>\n<p>The unweighted average of unemployment rate and inflation rate is ad hoc. Here\u2019s the conventional using y\/y CPI:<\/p>\n<p><a href=\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix.png\"><img fetchpriority=\"high\" fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-52550\" src=\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix.png\" alt=\"\" width=\"820\" height=\"532\" srcset=\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix.png 820w, https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix-300x195.png 300w, https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix-768x498.png 768w, https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix-624x405.png 624w\" sizes=\"(max-width: 820px) 100vw, 820px\"\/><\/a><\/p>\n<p><em><strong>Figure 1:<\/strong> Unemployment rate (blue bar) and y\/y CPI inflation (tan bar), in %. NBER defined peak-to-trough recession dates shaded gray. Source: BLS, NBER, and author\u2019s calculations.<\/em><\/p>\n<p>The use of y\/y inflation is arbitrary. Here\u2019s a measure using instantaneous (per <a href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=4554153\">Eeckhout, 2023<\/a>) inflation (T=12, a=4). (Equal weights on inflation and unemployment is also arbitrary; see <a href=\"https:\/\/econbrowser.com\/archives\/2022\/06\/sixty-years-of-the-misery-index\">here<\/a>).<\/p>\n<p><a href=\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix1.png\"><img decoding=\"async\" class=\"alignnone size-full wp-image-52551\" src=\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix1.png\" alt=\"\" width=\"820\" height=\"532\" srcset=\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix1.png 820w, https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix1-300x195.png 300w, https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix1-768x498.png 768w, https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/miserydecomppix1-624x405.png 624w\" sizes=\"(max-width: 820px) 100vw, 820px\"\/><\/a><\/p>\n<p><em><strong>Figure 2:<\/strong> Unemployment rate (blue bar) and instantaneous (T=12,a=4) CPI inflation (tan bar), in %. NBER defined peak-to-trough recession dates shaded gray. Source: BLS, NBER, and author\u2019s calculations.<\/em><\/p>\n<p>Note that the modified Misery Index in May is only 5.8% vs. 7.3% conventional. 5.8% compares favorably against the January 2021 value of 9.4%. (the comparison is against 7.8% using the conventional measure displayed in Figure 1).<\/p>\n<p>Which one better measures people\u2019s perceptions? Using the Michigan sentiment measure, one finds that the conventional measure is slightly better than the modified at predicting (Adj. R<sup>2<\/sup> is 0.38 vs. 0.26), but exhibits greater serial correlation.<\/p>\n<p>Moreover, the modified Misery measure peaks in 2022M06 while the conventional peaks at 2020M04. The Michigan sentiment series troughs at 2022M06, while the Gallup confidence index troughs at July 1st, 2022, roughly the same time (Conference Board confidence troughs at 2020M08).<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<\/p><\/div>\n<p>[ad_2]<br \/>\n<br \/><a href=\"https:\/\/econbrowser.com\/archives\/2024\/06\/misery\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Conventional and Instantaneous The unweighted average of unemployment rate and inflation rate is ad hoc. Here\u2019s the conventional using y\/y CPI: Figure 1: Unemployment<\/p>\n","protected":false},"author":1,"featured_media":231926,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[155],"tags":[],"_links":{"self":[{"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/posts\/231925"}],"collection":[{"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/comments?post=231925"}],"version-history":[{"count":0,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/posts\/231925\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/media\/231926"}],"wp:attachment":[{"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/media?parent=231925"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/categories?post=231925"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/tags?post=231925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}