The Misery Index—the sum of the unemployment rate plus inflation rate—is a shorthand way of looking at how the U.S. economy might affect the political fortunes of American presidents. The current MI is around 13, which is as high as it’s been since the early 1980s when stagflation was finally loosening its grip. When Jimmy Carter was blown out by Ronald Reagan in 1980, the MI was around 20. When Barack Obama took office in January 2009, it was 8.
A more direct way of measuring the mood of America is by looking at various measures of sentiment. Pollsters frequently ask voters a) if they are “satisfied” with the way things are going, and b) if the country is “heading in the right direction.” By those metrics, as compiled by AEI, Obama looks to be in big trouble:
Adding those numbers together creates a sort of ad hoc “Happiness Index” where the higher the number the better for politicians. Obama’s is 31 right now versus 96 for George W. Bush in 2003, 54 for Clinton in 1995, 59 for George Bush in 1991, 86 for Reagan in 1983, and 35 for Carter in 1979.
But that is today. What about next year? Will another year of 9 percent (or higher) unemployment and slow income growth make Americans more satisfied with the way things are going or more confident in the nation’s direction? The numbers might not get much worse, but it’s hard to see how they get a whole better—or how Obama’s approval ratings improve from current levels under that economic scenario. And if the United States suffers even a “mild” recession? Here’s Goldman Sachs:
A U.S. recession today would be painful. Given its high level, even a “small” increase could take the unemployment rate to 11-12%.