· The U.S. economic recession brought with it the highest level of misery in over twenty five years. The December misery index reached 12.7% which was up from 11.8% during November. The index is calculated as the sum of the unemployment rate and the y/y change in the consumer price index. Not only was the index level its highest since 1983, but the 5.2 point increase versus December '08 was the quickest since the "credit crunch" recession of 1980. 

· Higher unemployment accounts the index's stretch into double digits. At 10.0%, not only is the unemployment rate high but its 2.6 percentage point increase over the last twelve months is nearly the quickest since 1975. (Before the current reading, the 4.0 point rise as of June set the record.) 

· Low inflation has ameliorated some of the pain caused by higher unemployment, but the positive effect is about to diminish. The 2.8% gain in the CPI versus last year was down sharply from the 1980 peak of 14.6% when oil prices spiked. However, the misery index soon will reflect the increase in energy prices. 

· The Misery Index is calculated by Haver Analytics. It is the sum of the unemployment rate and the year-over-year percentage change in the CPI-U from the Bureau of Labor Statistics.

·  The Fed's Monetary Policy Response to the Current Crisis is from the San Francisco Federal Reserve published last May and it can be found here.

December '08

2009

2008

Misery Index (%)

7.5

8.9

9.7

  Unemployment Rate (%)

7.4

9.3

5.8