When economists crafted the misery index—a straightforward sum of unemployment and inflation rates—it became a go-to measure for assessing economic pain. In 1976, Jimmy Carter leveraged the index to criticize Gerald Ford, and Ronald Reagan later rebranded it as a political weapon to highlight Carter’s struggles with rising economic hardship. The misery index helped define those campaigns, suggesting a clear link between economic discomfort and voter behavior.
Fast forward to 2024, the misery index suggested a favorable outcome for the Biden administration’s legacy. Over President Joe Biden’s term, during which Kamala Harris served as vice president, the index fell from 7.8 to 6.7. This decline, marked by easing inflation and a robust labor market, should have signaled optimism. Yet, despite an ostensibly healthier economy, Harris lost. Even more striking, America appeared less “miserable” by this metric than in the eras of past electoral successes, like Reagan’s landslide re-election in 1984 or Bill Clinton’s second-term victory in 1996.
Voter discontent, however, isn’t unique to America. Across the globe in 2024, incumbents have suffered at the polls. From France’s Emmanuel Macron to Japan’s Liberal Democratic Party, governing leaders have faced backlash despite economic recoveries. Economists warn that this wave of anti-incumbency could lead policymakers astray, overshadowing the real gains from post-pandemic fiscal and monetary stimulus. The rapid recovery prevented a repeat of the post-2008 stagnation, but this doesn’t seem to be translating into political gratitude.
The gap between economic theory and voter sentiment may hint at something deeper. Past efforts to refine the misery index haven’t solved the mystery. Robert Barro’s 1999 attempt, which added long-term interest rates and economic growth gaps, also failed to predict voter behavior. The 2000 election, for instance, saw Al Gore lose despite economic gains under Bill Clinton. This reveals a truth economists are rediscovering: economic starting points and real household conditions matter profoundly.
While unemployment fell during Biden’s presidency, many voters felt the pain of rising living costs and depleted pandemic-era savings. Real disposable income, despite a strong job market, remains lower than in 2021. Voters likely compared this reality unfavorably to the pre-pandemic economic stability under Donald Trump, when the misery index was near historic lows.
Interest rates, often excluded from consumer inflation metrics, further complicate perceptions. A recent working paper points out that rising mortgage and loan costs have significantly soured consumer sentiment. Including these in inflation measures aligns better with the economic experience of everyday people.
Ultimately, while post-pandemic policies fostered growth, critics argue that they triggered unnecessary inflation. As discussions on economic recovery evolve, focusing on minimizing these missteps—without resorting to extreme measures like price controls—could shape future approaches. Misery, it seems, still holds lessons for politicians and economists alike.