Americans are feeling a lot more economic pain than the government’s official statistics would lead you to believe, according to a growing number of experts.
They argue that figures for unemployment and inflation are being understated by the government.
Unemployment and inflation are typically added together to come up with a so-called “Misery Index.”
The “Misery Index” was often cited during periods of high unemployment and inflation, such as the mid 1970s and late 1970s to early 1980s.
And some fear the economy may be approaching those levels again.
The official numbers produce a current Misery Index of only 8.9 – inflation of 3.9% plus unemployment of 5%. That’s not far from the Misery Index’s low of 6.1 seen in 1998.
But using the estimates on CPI and unemployment from economists skeptical of the government numbers, the Misery Index is actually in the teens. Some worry it could even approach the post-World War II record of 20.6 in 1980.
“We’re looking at government numbers that are really out of whack,” said Kevin Phillips, author of the book “Bad Money.”
According to the government’s most recent Consumer Price Index, a key inflation reading, consumer prices rose 3.9% in the 12 months ending in April, down slightly from the 4% annual inflation rate in March despite record gasoline prices.
But Phillips argues that consumer prices are probably up at least 5% and perhaps more than 10%.
Part of the disconnect may be due to the fact that nondurable goods, such as food and gasoline, makes up only 12% of CPI.
In addition, food and energy prices are eliminated from the so-called core CPI, which many economists tend to focus more closely on because they claim food and gas prices are volatile.
But food and energy costs are a very important part of household budgets. And those prices have been skyrocketing: Gas prices were up about 21% over the 12 months ending in April.
However, due to seasonal adjustments in the CPI, the government reported that gas prices were down 2% in April, even though on a non-adjusted basis, gas prices rose 5.6% from March.
And even that number may be too low. Measures of gasoline prices by AAA and the Department of Energy suggested prices rose as much as 10% in April.
Meanwhile, food prices rose 5.1% over the last 12 months, according to the report. The nearly 1% one-month jump in food prices in April was the biggest spike in 18 years.