Readers old enough to recall “the misery index” will remember it was computed by adding the inflation rate to the unemployment rate. On Friday, CNBC posted, and Drudge picked up, a brief story about how the misery index stands at its highest since 1983:
What the story did not explain is how government has gamed both elements of the misery index in the ensuing 28 years.
People who’ve given up looking for work no longer count as unemployed. Statisticians make the rising price of steak go away by assuming you buy less steak and more hamburger. And so on.
John Williams at ShadowStats.com still runs the numbers the way they were in those bygone days. Let’s recalculate...
That compares to a peak misery index of 22.0% in June 1980.
If circumstances now feel worse than they did then, if the “recovery” of the last two years seems like a chimera, now you have a statistical glimpse why.
If they don’t feel worse, then you’ve been successful at staying abreast of the trends... and on the “right side of the trade,” for which you should be commended. We’ll do our best to assist you in that endeavor, if we can...
The source of much of the “misery” in the index, the number of foreclosure filings, fell to a near four-year low in May, according to RealtyTrac. If the “recovery” were for real, this would be because homeowners can once again keep up with their payments.
But the real reason for the low number of filings appears to be that banks are “weighed down by an increasing inventory of seized homes,” as a Bloomberg story put it... so they’re holding off (again) on processing even more defaults.
In New York State, 213,000 homes are now in severe default or foreclosure, according to figures from LPS Analytics. At the current rate banks are unloading these properties, it will take 62 years to clear the inventory.
In New Jersey, it will take 49 years. In Illinois, Massachusetts and Florida, it will take a decade.