Here is happier spin on data from Barron’s Gene Epstein June 9 (it’s less rosy than typical from Mr Optimistic):
“Take the recent 3.9% reading on year-over-year consumer price index inflation, add May’s 5.5% jobless rate, and you get a misery index of 9.4%. While far below the peak — which topped 21% in mid-1980 — the MI can be regarded as a harbinger of the economic outlook over the next year or two.
That outlook is for stagflation: inflation combined with slow or stagnant growth and rising unemployment.
There is still some question whether those in charge of these matters will ever see fit to declare that the economy is in recession. But given the stubborn rise in food and energy prices, inflation is likely to persist, squeezing incomes. And with credit still scarce, growth in gross domestic product should crawl along at an annual rate of 1%-2% at best. With growth not fast enough for the increase in jobs to keep up with the growth of the labor force, the jobless rate will keep rising. So will the index of misery.
But while all that is miserable enough, the biggest jump in the unemployment rate in a quarter-century is still far less alarming than it might seem.
The employment report for May, released Friday morning, indicated that joblessness had risen to 5.5% from 5% in April. But more than half the increase was concentrated among 16-to-24-year-olds. Unemployment among workers 25 and older, sometimes referred to as the “prime-age” labor force, rose by two-tenths of a percentage point, to 4.1% from 3.9%. And while that is hardly good news, it’s by no means a record — and about what you’d expect under the slow-growth conditions of the past year.”
