What does the Misery Index combine to measure economic conditions?

The Misery Index is an economic indicator created to provide a simple measure of economic distress experienced by the average citizen. It combines the unemployment rate and the inflation rate, which reflects both the cost of living and the level of joblessness in the economy. High levels of either unemployment or inflation indicate economic hardship, thus contributing to a higher Misery Index value, which signals a less favorable economic environment.

By focusing specifically on these two metrics, the Misery Index effectively captures key aspects of economic wellbeing. The unemployment rate indicates how many people are without jobs, while the inflation rate reveals how quickly prices are rising. Together, they encapsulate the critical factors influencing consumer sentiment and overall economic stability. This makes the combination of these two rates essential for understanding the broader economic conditions affecting individuals and households.