A:

The

most miserable month ever according to the Misery Index was June of 1980. The all-time high for the Misery Index was reached on June 1, 1980, when it hit 21.98%.

The Misery Index was devised by the economist Arthur Okun in the 1960s. Okun, an advisor to President Johnson, wanted a simple way to express the social costs of policy in terms of inflation and unemployment. To achieve this, he added the rates of inflation and unemployment together and called the sum the Misery Index.

From the 1960s to the '80s, oil cartels, the Cold War and the Vietnam War all took a toll on the economy, driving up inflation and unemployment. When Gerald Ford ran for re-election, his Democratic opponent, Jimmy Carter, used the high Misery Index of 13% as proof of Ford's inability to steer the economy. Carter was elected president, but he unwittingly tied the rope from which he'd later hang.

Under the Carter administration, a taxing regime and price controls were implemented. While this slowed inflation, it also meant that businesses were given less incentive to profit and, thus, less incentive to hire. Unemployment rose sharply and the Misery Index hit an all-time high of 21.98% during Carter's presidency.

After having called attention to the index through his own election campaign, Carter tried to minimize the index's importance during his re-election campaign. This strategy failed and Reagan was elected president, ushering in his own solutions in the form of Reaganomics.

For related articles, read Economic Indicators: Overview and Laffer Curve Key to Ideal Tax Rate.

This question was answered by Andrew Beattie.

RELATED FAQS
  1. When has the United States run its largest trade deficits?

    In macroeconomics, balance of trade is one of the leading economic metrics that determines the trading relationship of a ... Read Full Answer >>
  2. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  3. Which is more important to a nation's economy, the balance of trade or the balance ...

    There is no question the composition of a country's balance of payments is more important than its balance of trade. This ... Read Full Answer >>
  4. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  5. What is the difference between JIT (just in time) and CMI (customer managed inventory)?

    Just-in-time (JIT) inventory management focuses solely on the need to replenish inventory only when it is required, reducing ... Read Full Answer >>
  6. What are some examples of Apple and Google's best-selling product lines?

    There are many good examples of product lines in the technology sector from some of the largest companies in the world, such ... Read Full Answer >>
Related Articles
  1. Economics

    Defining Cost-Push Inflation

    Cost-push inflation is caused by an increase in the cost of production, due to higher prices for raw materials or labor.
  2. Economics

    Calculating the Consumption Function

    The consumption function shows the level of consumer spending as it relates to disposable income.
  3. Fundamental Analysis

    Examining Mexico's Trillion-Dollar GDP

    Examining the gross domestic product growth and composition of Mexico, the second largest economy in Latin America
  4. Investing News

    Canada in Recession

    On September 1, 2015, Statistics Canada reported that the economy has contracted by 0.5% in Q2 2015, after falling 0.8% in previous quarter.
  5. Fundamental Analysis

    What Causes Inflation in the United States

    Inflation is the main catalyst behind U.S monetary policy. But what causes this phenomenon of sustained rising prices? Read on to find out.
  6. Term

    Understanding Net Exports

    Net exports are the difference between a country’s exports and imports.
  7. Economics

    Is a Recession Coming?

    In the space of a week, the VIX Index, a measure of market volatility, spiked from 13, suggesting extreme complacency, to over 50, evidencing total panic.
  8. Active Trading Fundamentals

    The Top 5 Impact Investing Firms

    Learn what impact investing is and obtain information on some of the top impact investing firms ranked by total assets under management.
  9. Mutual Funds & ETFs

    ETN Analysis: Rogers Intl Commodity Energy Total Return

    Learn more about the Rogers International Commodity Total Return, which is an exchange-traded note that tracks a broad index of commodity futures.
  10. Investing Basics

    Explaining Trade Liberalization

    Trade liberalization is the process of removing or reducing obstacles that impede the exchange of goods and services between nations.
RELATED TERMS
  1. Sticky Wage Theory

    An economic hypothesis theorizing that pay of employees tends ...
  2. Normal Profit

    An economic condition occurring when the difference between a ...
  3. Supply

    A fundamental economic concept that describes the total amount ...
  4. Purchasing Power

    The value of a currency expressed in terms of the amount of goods ...
  5. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  6. Cost, Insurance and Freight - CIF

    A trade term requiring the seller to arrange for the carriage ...

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!