The Misery Index is on the rise all over the world but particularly in the UK where we are back to 1994 levels with much more to come as both inflation and unemployment both head upwards:

At that rate it won’t be long before we see 1990 levels.

Briefly, the Misery Index is the sum of the uneployment rate and inflation rate :

The misery index is an economic indicator, created by economist Arthur Okun, and found by adding the unemployment rate to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation create economic and social costs for a country.

As Societe Generale write at FT Alphaville this does not bode well for the outlook for the pound :

The last time that the UK posted this level of misery index in March 1994, the intervention rate was at 5.25% vs 0.5% today. And that is without mentioning the budget deficit. That is to say that the room to manoeuvre is the not the same for improving the situation since the Cameron plan can only deteriorate this situation further. Yet another reason to be especially cautious on the outlook for the pound sterling.

Given our debt funding requirements running into the hundreds of billions up to 2015, not to mention the vast sea of debt we already have, any increase in interest rates or decline in sterling will just heap a whole lot more pain and misery on us.

Assuming of course that the whole rediculous game doesn’t go tits up before then.

As a complete aside, Misery Index is also the name of a damned good Death Metal band so I will take the opportunity to add one of their fine offerings here as well so as not to disappoint any wayward metalheads (I also happen to like this track a lot).

Misery Index – Discordia
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