The Misery Index, created by economist Arthur Okun in the 1970s, is the simplest of economic indicators. Add the unemployment rate to the rate of inflation, and that's it. High is bad, low is good.
The index bottomed out at 2.97 in July 1953, a time when the Korean War was ending, Dwight Eisenhower was in the White House, and, as GM president "Engine Charlie" Wilson would later remember, what was good for General Motors was good for America.
It would rise to a modern high of 20.76 in 1980, thanks to spiraling unemployment and rampant inflation. Jimmy Carter — best remembered for donning a cardigan sweater, turning down the White House thermostat and failing to rescue hostages in Iran — became a symbol of American impotence. A new political paradigm was created: the president as helpless victim.
The index declined gradually during the next decade, and sunk drastically during the booming 1990s. Whether you credit Bill Clinton's policies, Bill Gates' software or Ronald Reagan's sunny optimism, the index achieved a modern low of 6.05 in 1998.
UCCS economist Fred Crowley's most recent "Quarterly Updates and Estimates" (QUE), which provides a detailed snapshot of the Colorado Springs economy four times annually, notes that the local misery index stands at 12.65 today.
That's its highest level since 1983.
No surprise there. We all know jobs are scarce, everything is more expensive, and our elected officials run the gamut between incompetence and lunacy.
No wonder gold has reached $1,600 per ounce! No wonder China is poised to rule the world! No wonder the only people with secure jobs are lawyers, bankers and Wal-Mart greeters! It's 1980 again, except this time we're really screwed. President Obama can't deal with the House Republicans and "Weepin' John" Boehner — no wonder he can't fix the economy.
No Clinton, no Reagan, no Gates, just Sarah Palin, Michele Bachmann and Mark Zuckerberg. Time to sell everything and move to ... why bother? The rest of the world sucks, too. Guess we'll just have to stay here, stay poor, get old, and die.
But staying here might be the best decision you'll ever make. Consider some QUE stats: In the last year, the average price of a single-family house has dropped from $237,029 to $215,741. That's no statistical quirk, since the median price has also declined, from $209,900 to $185,000.
"Considering differences in down payments, interest rates, and tax credits," Crowley writes, "buying a home today is between $50,887 and $52,387 less expensive than a year ago. If job and income growth do materialize, the current period will be remembered as having been a great time to buy a house."
Is it 1980 all over again? Are the modern harbingers of doom — soaring precious-metals prices, intractable politics, war and revolution in the Middle East — actually heralding a rip-roaring boom?
In July 1980, the Dow Jones Industrial Average, at 935, had been stagnant for years. Gold and silver prices, at $800 and $50 an ounce, respectively, had exploded. Conventional wisdom held that America was in decline, our best days were distant memories, the almighty dollar would soon collapse, and we'd cave to the mighty Soviet Empire.
Didn't happen. Gold and silver prices collapsed and the stock market exploded, going from a 1981 intraday low of 680 to 10,000 in 1999. Meanwhile, the "Evil Empire'" disintegrated.
In 1981, I moved my family from Miami to Colorado Springs, from which I had fled 20 years before. We had small children, no jobs and scant savings. We rented a house in Rockrimmon and watched our savings trickle away as we tried to figure out how to make a buck. The local economy was flat to down. A little income would've been welcome.
One day, my old friend Tim dropped by. He was (and is!) an unquenchably optimistic entrepreneur/risk-taker, who had already made and lost millions several times over. We sat on the deck, and he listened to me complain.
"Look!" he said. "See all those houses? Those are your neighbors. They've got families, education, ambition. They'll do whatever it takes. You think they're going to give up? They won't. Don't bet against them. They'll win, you'll win, we'll all win."
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