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Gold prices and the "new" misery index
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There are some things from the 70's that I would just as soon forget.
Farah Fawcett is not one of them, but the misery index definitely qualifies.
Created by economist, Arthur Okun, the misery index was calculated by adding the unemployment rate to the inflation rate. Naturally, the higher the number turned out to be the greater amount of "misery" there was.
But as it turned out, the misery index wasn't just some tool used by economists to put a hard number on the suffering. In the hands of James Earl Carter, it became a ticket to the White House.
During the Presidential campaign of 1976, candidate Carter made frequent references to the Misery Index, stating that no man responsible for giving a country a misery index that high had a right to even ask to be President.
Of course, he was referring to President Gerald Ford who presided over an economy that delivered a score of almost 14% during the campaign. In May of that year the inflation rate was 6.2% while unemployment stood at 7.40%.
The rest, as they say, turned out to be history as the Carter years soon began. History provided the crack, and Carter waltzed right through it.
However, by the election of 1980, Carter's own words had come back to haunt him as he lost in a landslide to Ronald Reagan. Under Carter the Misery Index had reached an all-time high of 21.98% giving a whole new meaning to the word ‘malaise".
Unfortunately, some 32 years later history might be on the verge of repeating itself again. A brutal housing bubble has given birth to a whole new set of misery indicators-helping to elect another President fighting to push back the tide.
The New Misery Index
The new indicators are bankruptcy filings and foreclosures. And how the Obama Administration manages to deal with them will likely set the tone of the next fight for the top job.
So where is the misery to be found these days? According to MSN Money it's all around us.....
State |
Bankruptcy
#'s |
Foreclosures |
Households |
% of
households |
Nevada |
18,337 |
34,417 |
1,102,379 |
4.8% |
Michigan |
53,887 |
87,210 |
4,527,655 |
3.1% |
Georgia |
60,443 |
59,057 |
3,961,474 |
3.0% |
Ohio |
57,336 |
89,979 |
5,064,900 |
2.9% |
California |
130,503 |
249,513 |
13,308,346 |
2.9% |
Colorado |
20,934 |
39,403 |
2,127,156 |
2.8% |
Tennessee |
47,114 |
25,914 |
2,724,729 |
2.7% |
Florida |
66,329 |
165,291 |
8,718,385 |
2.7% |
Indiana |
37,795 |
27,980 |
2,778,394 |
2.4% |
Illinois |
54,793 |
64,310 |
5,246,005 |
2.3% |
Arizona |
19,145 |
38,568 |
2,667,502 |
2.2% |
Missouri |
24,767 |
23,492 |
2,647,274 |
1.8% |
Utah |
9,243 |
7,438 |
925,242 |
1.8% |
New Jersey |
26,120 |
31,071 |
3,499,406 |
1.6% |
Alabama |
29,131 |
5,572 |
2,137,018 |
1.6% |
Maryland |
17,473 |
18,879 |
2,318,456 |
1.6% |
Arkansas |
13,636 |
6,406 |
1,287,429 |
1.6% |
Idaho |
5,220 |
3,640 |
631,071 |
1.4% |
Connecticut |
8,121 |
11,860 |
1,438,436 |
1.4% |
Kentucky |
21,011 |
5,105 |
1,906,096 |
1.4% |
Virginia |
28,212 |
16,307 |
3,274,394 |
1.4% |
Texas |
43,489 |
84,469 |
9,432,672 |
1.4% |
Rhode Island |
4,217 |
1,838 |
450,884 |
1.3% |
Washington |
21,452 |
15,184 |
2,744,069 |
1.3% |
Wisconsin |
21,121 |
12,133 |
2,560,099 |
1.3% |
Oregon |
12,440 |
8,461 |
1,609,595 |
1.3% |
Nebraska |
6,471 |
3,636 |
780,804 |
1.3% |
Massachusetts |
16,250 |
17,737 |
2,722,190 |
1.2% |
North Carolina |
22,393 |
29,101 |
4,125,308 |
1.2% |
Minnesota |
16,466 |
11,557 |
2,304,467 |
1.2% |
Oklahoma |
10,858 |
8,256 |
1,623,010 |
1.2% |
Delaware |
3,473 |
999 |
388,616 |
1.2% |
New York |
46,202 |
38,688 |
7,939,846 |
1.1% |
Mississippi |
11,948 |
1,409 |
1,254,908 |
1.1% |
Louisiana |
15,113 |
3,968 |
1,859,179 |
1.0% |
Pennsylvania |
35,521 |
16,379 |
5,477,864 |
0.9% |
Kansas |
8,711 |
2,434 |
1,219,439 |
0.9% |
Iowa |
7,967 |
4,103 |
1,329,596 |
0.9% |
New Mexico |
4,481 |
2,994 |
862,067 |
0.9% |
New Hampshire |
3,868 |
1,238 |
594,052 |
0.9% |
Alaska |
877 |
1,332 |
282,234 |
0.8% |
Montana |
1,826 |
1,150 |
435,533 |
0.7% |
West Virginia |
5,226 |
460 |
882,685 |
0.6% |
South Carolina |
8,446 |
4,247 |
2,021,947 |
0.6% |
Hawaii |
2,078 |
966 |
506,737 |
0.6% |
District of Columbia |
856 |
777 |
284,221 |
0.6% |
North Dakota |
1,341 |
250 |
310,548 |
0.5% |
Wyoming |
830 |
356 |
242,332 |
0.5% |
Maine |
2,966 |
286 |
696,611 |
0.5% |
Vermont |
1,256 |
29 |
311,434 |
0.4% |
South Dakota |
1,437 |
24 |
357240 |
0.4% |
Source: U.S. Census Bureau, RealtyTrac and Automated Access to Court Electronic Records
The Answer to the Misery Index
Needless to say, that's something of a tall order-even for Obama.
As a result, the misery index lives on and once again it seems to have a life of its own.
Beyond that I just don't see how it's possible to print our way to prosperity—even though that's what they're essentially planning to do.
Personally, I'd prefer "Charlie's Angels" reruns any day.
Of course, the misery index isn't the only thing to make a comeback from the 70's. Gold is soaring just like it did 30 years ago.
Economic concerns have once again driven investors into the metal, pushing it higher even as other commodities have tumbled. That has helped the stocks of gold-producers almost double in the past three months.
In fact, our own precious metals expert Greg McCoach says gold could top $2,000 an ounce in the years to come as the new misery index goes even higher.
So break out the Jiffy Pop and the bell bottoms if you like. Just keep an eye on gold while you're at it.
Long term it is headed higher.
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