Misery Index plus federal taxes chart

[enoch150]

The Misery Index is the sum of the unemployment rate and the inflation rate. It can be found here: http://www.miseryindex.us/default.aspx

I figured taxes are pretty miserable, too, so I included federal taxes as a percent of GDP. It's a lot less volatile than the Misery Index because when unemployment increases, tax confiscations drop. The way I see it, rather than masking booms and hiding busts, it exposes persistent government induced misery that is otherwise masked during booms by the original Misery Index.

I figure there will be widespread rioting if it hits 50. Also, the Nixon-Carter years were really bad times.

[enoch150]

Did it again using the U-6 unemployment number instead of U-3.

[LibForestPaul]

Unfortunately, statistics are almost pointless.

What is the definition of federal taxes, GDP, unemployment, inflation rate. Who defines these terms, who calculates them, and who can be trusted?

If you read in the WSJ that the Federal Government states that unemployment is at 6%, I tell you it is 8%, how are you going to disprove either facts presented to you?

[enoch150]

Unfortunately, statistics are almost pointless.

What is the definition of federal taxes, GDP, unemployment, inflation rate. Who defines these terms, who calculates them, and who can be trusted?

If you read in the WSJ that the Federal Government states that unemployment is at 6%, I tell you it is 8%, how are you going to disprove either facts presented to you?

Yes, it's all government lies. There was no stagflation in the 70's, Great Depression in the 30's, Roaring 20's, or technology boom in the 90's. The government made it all up. The inflation rate now is actually negative 45%, unemployment is really 112%, and almost all of what the federal government takes from people shouldn't really be classified as a tax because most of it is actually a gift and the rest doesn't exist at all, the government just says it collects the tax when it really doesn't do anything. It's not like there are independent verifications of any of this which, although they track slightly different things, are remotely close to the official government faked numbers.

Like MIT's Billion Prices Project.



Or the ADP report.

[Zippyjuan]

Interesting to see that the "alternative" price inflation measures track the CPI pretty closely so they all seem to be reasonable measures of price inflation. Nixon- Carter peak in the Misery Index is lower than Reagan in 1980. To get that to 50 you would need say 25% unemployment (8.2% currently) and 25% inflation (current unadjusted rate is 2.7%). If that were to happen it would mean a tripling of the unemployment rate and a tenfold increase in the rate of price inflation.

[enoch150]

Interesting to see that the "alternative" price inflation measures track the CPI pretty closely so they all seem to be reasonable measures of price inflation. Nixon- Carter peak in the Misery Index is lower than Reagan in 1980. To get that to 50 you would need say 25% unemployment (8.2% currently) and 25% inflation (current unadjusted rate is 2.7%). If that were to happen it would mean a tripling of the unemployment rate and a tenfold increase in the rate of price inflation.

It peaked in June 1980. Reagan took office in January 1981.

I should have clarified that the 50 I mentioned included taxes as a percentage of GDP and U-6 unemployment, not U-3. It was late and I was thinking about doing it with U-6 while writing the first post.

In June of 1980 federal taxes were 19% (expected to be 16.3% in 2012).
In June of 1980 U-6 unemployment was 13.45% (14.9% as of February)
In June of 1980 inflation was 14.38% (2.87% as of February)

The score in June of 1980 was 46.83.

18% federal taxes, 15% U-6 unemployment, and 17% inflation gets us to 50.

[Zippyjuan]

AH- so you were counting all three- the traditional Misery Index is only unemployment plus inflation. Personally, I don't think U6 unemployment is a terribly useful number since it includes people who are not looking for work in the first place. I believe that if you are not looking for work for whatever reason that you should not be counted as unemployed. That distorts the figure to include them.

And thanks for the correction on the Reagan date. Once he took office, unemployment (U3- the most commonly used figure) started to soar to over 10% (which was higher than the peak for the current crisis) as the Fed tried to wring inflation out of the economy via very high interest rates (as high as 20%).

Interesting charts- thanks for taking the time and effort to make them. Looks like taxes as a percent of GDP are about a low as they have been in over 50 years. Of the three figured the only one up right now is unemployment.

[enoch150]

The problem I had with U-3 is that someone could be working as little as 1 hour/week and be classified employed, even if they're actively looking for other work. The underemployed number is only included in U-6. I figured that a "misery index" should be trying to measure how much stress free time people have and how much they can afford to purchase. Inflation destroys purchasing power, unemployment or underemployment prohibits the purchase of discretionary goods and may cause stress about paying bills, and taxes remove money available for purchasing discretionary goods and may cause stress about paying other bills. That's all I was thinking.

Just saw Alex Merced's latest video which made a fair point about effective tax rates and not using taxes as a percentage of GDP, so maybe I'll have to switch that part.