PRESIDENT Obama, writing in The Washington Post, said, "By now, it's clear to everyone that we have inherited an economic crisis as deep and dire as any since the days of the Great Depression." But how would we know if and when this crisis is really more "deep and dire" than others? Many may believe we're in the worst recession since the Great Depression, if only because politicians and the press keep repeating that claim. But we need to compare some facts to discern whether this recession is (or will be) "worse" in some sense than those of 1973-75 or 1981-82.(Via JWF - who has more.)
Congressional Budget Office Director Douglas Elmendorf told the House Budget Committee that if the economy is still contracting by mid-year, then this recession will be longer than the 1981-82 and 1973-75 downturns, each of which lasted 16 months. Yet this recession was quite mild until last September.
And the severity and human discomfort of downturns can't be measured by their duration. A wise adviser to President John Kennedy, Arthur Okun of Yale, devised the "misery index" to gauge the pain of economic crisis - a measure that simply adds together the unemployment rate and the inflation rate.
It hit 22 percent in June 1980, during an inflationary recession that preceded the Fed's disinflationary squeeze of 1981-82.
The misery index was nearly as bad in January 1975, at 19.9 percent. Assuming inflation was close to zero this January, the misery index would have been roughly the same as the unemployment rate, or 7.6 percent.
By this standard, we have a very long way to go before the economy feels nearly as miserable as it did in 1975 or 1980.
OTHERS LINKED TO THE ARTICLE:
How Bad Is this Economic Downturn? (by Don Boudreaux)
Don Boudreaux for Cafe Hayek - Found 10 hours ago...left -- remain so stubbornly blind to the reality of the current downturn, as explained today by Alan Reynolds. Here's a sample paragraph:Un-recommended reading
tnr1.com for The Plank - Found 8 hours ago...the case that we are in a recession. Recessions, Reynolds writes, “have almost always ended within a year or so, before there was a Federal...Is it really that bad? Nope...
Steve Levy for Everyone's Blog Posts - RecruitingBlogs.com - Found 4 hours agoToo much fear mongering not enough reality and action...Alan Reynolds Embraces Deflation
myglesias for Matthew Yglesias - Found 7 hours agoA wise adviser to President John Kennedy, Arthur Okun of Yale, devised the “misery index” to gauge the pain of economic crisis - a measure thatPolitics of Money Radio AM1000 KCEO, 1-2pm Today...
Politics of Money - Found 18 hours agoAmazon.com Press Conference Sparks Kindle Speculation - Bloomberg ... Economy. It's a Recession, not a 'Catastrophe' - Alan Reynolds, New York...How to gauge Recession...
ethics for Global Affairs Forum, Politics, Law, Science, Health - Found 10 hours ago...titled,It's a Recession not a Catastrophe. ... To see the Misery Index now and historically, go here: http://www.miseryindex.us/The Stimulus Bill -- Much Overkill, Little effectiveness
Objective Conservative for Objective Conservative - Found 17 hours agoCheck it out at: http://www.nypost.com/seven/02092009/po...Daily Links
email@example.com (JJG) for The GW Patriot - Found 6 hours agoGoldman Sachs Wants Out Of TARP. It's A Recession, Not A Catastrophe. WTO Members Meet To Assess Growing Protectionism...More on that unhelpful “catastrophe” talk
admin for Dinocrat - Found 7 hours agoIt’s a recession, not a ‘catastrophe’…A wise adviser to President John Kennedy, Arthur Okun of Yale, devised the “misery index” to
WELL, WE SCOOPED THEM ALL ON THIS. ALL OF THEM. EVERY SINGLE ONE.
We first posted this on 1/26/09:
And again, 1/28/09:
THE MISERY INDEX - THEN AND NOWWIKI:The misery index is an economic indicator, created by economist Arthur Okun, and found by adding the unemployment rate to the inflation rate.
... During the Presidential campaign of 1976, Democratic candidate Jimmy Carter made frequent references to the Misery Index, which by the summer of 1976 was at 13.57%.
Carter stated that no man responsible for giving a country a misery index that high had a right to even ask to be President.
Carter won the 1976 election.
However, by 1980, when President Carter was running for re-election against Ronald Reagan, the Misery Index had reached an all-time high of 21.98%. Carter lost the election to Reagan.
TODAY, THE MISERY INDEX IS 8.
- REAGAN DIDN'T TELL US THAT THE WORST WAS YET TO COME.
- REAGAN TOLD US IT WAS MORNING IN AMERICA, THAT OUR BEST DAYS WERE STILL AHEAD OF US.
- AND HE HELPED US MAKE THAT TRUE.
- EIGHT. NOT 22.
- THAT MEASN THE MISERY INDEX IS ONE-THIRD OF WHAT IT WAS THEN.
- YET OBAMA TELLS US WE NEED A TRILLION DOLLAR STIMULUS PACKAGE, AND THAT THE WORST IS YET TO COME.
- AND THAT WE MUST MUST MUST PASS HIS "STIMULUS PACKAGE" TO FIX THE ECONOMY.
- THAT'S NOT OPTIMISM; IT'S PESSIMISM AND SOCIALISM.
Regular readers know we scoop the biggies all the time. Spread the word. Bookmark us. Blogroll us.
BY OFFFERING OPTIMISTIC CONSERVATISM AND CUTTING TAXES, REAGAN SAVED US DURING MUCH WORSE TIMESTHOUGH THE MISERY INDEX WAS THREE TIMES GREATER THEN THAN NOW, REAGAN NEVER TRASH-TALKED THE US ECONOMY.
REAGAN NEVER LOST FAITH IN AMERICA OR THE FREE MARKET.
BY REMAINING TRUE TO OUR FIRST PRINCIPLES,
BY STRENGTHENING OUR NATIONAL SECURITY,
AND BY CUTTING TAXES,
REAGAN HELPED AMERICA RENEW ITSELF.
TO GET OUT OF OUR CURRENT RECESSION,
WE NEED MORE REAGANOMICS AND LESS OBAMANOMICS.
- Posted by Reliapundit @ 12:00 AM ; Permalink;