Biden misery index on rise as Americans pessimistic about country's future

Created by the late economist Arthur Okun, the misery index became widely known in the 1970s and early 1980s during the presidencies of Jimmy Carter and Ronald Reagan. It adds together two measures of economic pain — the unemployment rate and inflation for consumers — to give a sense of the economic distress felt by everyday Americans.

The index hit 11% in November and December and reached 11.5% last month — higher than any month in 2008 when the Great Recession began and just behind its highest levels in late 2009 and early 2010 when unemployment was around 10%. The current level is the highest in a decade, not including the early days of the COVID-19 pandemic.

Economists don't consider the misery index a sophisticated metric but say it's a useful tool.

"It's short-hand, it's a rule of thumb," David Wessel of the Brookings Institution told CNN. "The average person can understand it."

The rise in the misery index doesn't appear to match the economy's strong growth — on the surface.

Indeed, on paper, the economy appears to be doing well. Gross domestic product grew by 5.7% last year, the largest annual increase since 1984. The labor market is strong, with the unemployment rate at just 4%. And workers' wages have increased across multiple industries.

Yet, Americans aren't feeling good about the economy. Only 23% say the economic conditions in the country today are good or excellent, while 37% say they're poor, according to a Gallup poll from last month.

CNN's most recent poll on the economy found that 75% of Americans are worried about the state of the economy in their own community and 63% say the U.S. economy is in poor shape.

A primary reason for the gloomy outlook appears to be soaring inflation, which has caused prices to rise on everyday items from groceries to gasoline.

According to the same CNN poll, 80% of respondents expressed concern about this very problem.

U.S. wholesale prices increased by 1% in January, marking the largest gain in a year and doubling the surge expected by Wall Street economists. Meanwhile, the Labor Department said Tuesday the producer price index, which measures prices paid for the goods used to make products before they reach consumers, surged 9.7% in the last 12 months.

"Oof," wrote Axios chief economic correspondent Neil Irwin upon hearing the news. "Inflation is getting worse, not better."

These latest figures came after the Labor Department reported last week that consumer prices climbed 7.5% in January from the same time the previous year, the biggest increase since 1982 and above expectations.

Such price increases have eliminated any potential benefits of higher wages, leading to an actual pay cut for the average worker. Real hourly earnings decreased by 1.7% last year, according to the Labor Department.

Despite a growing economy with available jobs, many people are struggling to pay for basic items such as food, rent, and electricity — a fact that's above all hurting lower-income Americans, who spend a higher percentage of their income on necessities rather than luxuries.

Consumer confidence has tumbled to an 11-year low as inflation skyrockets.

Some 69% of Americans disapprove of how Biden has handled inflation, according to recent polls. Polling also shows a strong majority of the country — in some cases upwards of 62% — disapproving of Biden's handling of the overall economy.

These figures appear to be indicative of a larger issue. Over 70% of Americans believe the country is headed in the wrong direction, according to a recent NBC News poll. About 60% of respondents said their family income is falling behind the cost of living. Only 30% felt they're keeping up, and 7% responded their incomes are increasing faster than the cost of living.

The poll found Americans' most popular responses, when asked to describe the state of their country, were "bad," "lost," "downhill," "negative," "struggling," and "divisive."

Another recent poll — this one from Morning Consult and Politico — found 68% of voters believe the country is on the wrong path. Only 32% said the U.S. is on the right track.

On Monday, Rasmussen Reports unveiled its latest survey asking likely voters whether the country is heading in the right or wrong direction. Just 30% said the right direction, compared to 64% who responded the U.S. is on the wrong track.

This fits with a broader and recent pattern of some two-thirds of Americans saying the country is heading in the wrong direction.

The economy is a key driving factor leading to pessimism, but not the only one. For example, 58% of Americans are dissatisfied with the level of immigration into the U.S. today, while 34% are satisfied, according to Gallup. Other polling shows more than 80% of Americans are concerned about the ongoing spikes in violent crime nationwide.

One of the key factors in the nation's gloomy mood appears to be the public's plummeting trust in the federal government. According to Pew Research, less than one-quarter of Americans say they can trust the government to do what is right "just about always" or "most of the time," a near-historic low in the organization's polling. 

Last year, meanwhile, 39% of Americans had a great deal or fair amount of trust in the federal government to handle either domestic or international affairs. The number for international affairs is the lowest in Gallup's history of asking the question; the number for domestic affairs is among the lowest.

These trends haven't helped Biden, whose own poll numbers have dropped significantly in recent months. Americans generally disapprove of Biden's handling of crime, immigration, and his overall job performance. Some pollsters have cited his support for teaching critical race theory and botched withdrawal from Afghanistan as factors that have contributed to his low approval ratings.

All this could prove problematic for Democrats heading into this November's midterm elections. In a new national survey from the Trafalgar Group, 54% of American voters prefer Republican candidates in the midterm elections, compared to 42% who prefer Democratic candidates. Inflation, immigration, and law and order were among the key issues determining voters' decisions, according to the data.