March 24 2008 by Ellen Roseman
Economists have a measure, called the misery index, that represents the unemployment rate and the inflation rate added together. If prices go up at the same time as the economy and job growth stagnate, the average consumer feels miserable.
Livio di Matteo, an economics professor at Lakehead University in Thunder Bay, wrote an article in the Winnpeg Free Press (March 8), showing the misery index under various Canadian governments. He added the Bank of Canada’s prime interest rate to come up with a “tri-misery index.”
The results are intriguing, he says. No political party has a monopoly on misery.
The best period turns out to be that of John Diefenbaker (1957-63) when the interest rate, unemployment rate and inflation rate sum to an annual average total of 12 percentage points.
Next follows the current Harper period and the Pearson era (1963-68), which are tied at a total of 13.
After that comes the Chretien-Martin era (1993-2006), which had low interest rates and low inflation but higher annual unemployment rates that came together for an annual average total of 15 percentage points.
Next comes the first Trudeau era (1968-1979), which saw the average annual value of misery rise to 21 percentage points as higher inflation, unemployment and interest rates in an environment of stagflation took hold.
The first Trudeau era was slightly superior in performance to the Mulroney era (1984-1993), which saw an average annual misery value of 22, which in turn was better than the second Trudeau period (1980-84), which also coincided with a major recession and saw the misery index at 30 points.
And what constitutes the most miserable period in recent economic history? The two years spanned by the short-lived Clark government (1979-80) — which incidentally could also be termed the Trudeau interregnum — was the most miserable economic time with an average Tri-Misery measure of 32 percentage points.
So, the misery index is at a low level right now. But things are at a turning point. The U.S. economy is going into recession and Canada could follow suit. And who knows what will happen to inflation if the current commodity boom keeps up?
Is there a misery index for consumers relating to the pain you feel when companies overcharge and overbill you, keep you waiting for a response, then ignore your complaint and treat you as a non-person? If so, I think the misery index is going up.
Just browse through a few of the emails I got this past weekend to see how miserable these readers are feeling.