New figures released by the state Department of Labor shows our collective misery rate continues to drop. But it appears to be a fragile confidence, according to one state economist.
The November issue of The Connecticut Economic Digest reports the basic premise of the Misery Index is that a declining unemployment rate, coupled with a slowly rising inflation rate (based on annualized percentage change of the consumer price inflation) or even falling prices – deflation, are two monthly measurable aspects of consumer distress. When they are put together they can provide a measure of changing consumer confidence or can be an indication of lessening of stress on the individual in the economy.
There’s a slight twist, though, in the Connecticut numbers, according to Lincoln S. Dyer, a state economist who wrote The Connecticut Economic Digest article. He said, “…recently in the ongoing employment recovery from the Great Recession, both the unemployment rate and annualized growth of consumer prices (inflation) have been dropping steadily and significantly.”
Dyer also said, “[C]onfidence, while improving, is very fragile especially as government tax collections are constrained from falling prices of revenue sources (deflation), which adds to the pressure for tax increases and a further weakening of confidence.”
The falling and current low measures of the state’s Misery Index are approaching previous levels where major economic reversals have happened in the past (below 5 on the Misery Index, it is 5.2 for September 2015). The all-time low on this CT Misery Index was 4.5 in January 2002, and the all-time high was June 1980 at 20.3.
