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Misery Index falls

The recently released Augmented Misery Index for the second half of 2011 reflects Americans rising spirits about their financial situations.

The Pulse is up today on news that we Americans are less than half as miserable as we were just six months ago. That’s according to the non-partisan Peterson Institute for International Economics’ bi-annual Augmented Misery Index, which uses an economics-based equation to determine the nation's mood about its finances.

Every six months, the index adds the percentage of change in the inflation rate (consumer price index) to the unemployment rate then subtracts the percentage of change in housing prices. The result of that equation is supposed to correlate to how miserable we are. Big index numbers are bad (the worst the index has ever been is 24.9 in the first half of 2009), low numbers signal better times (like in the second half of 2004, when the index fell to a joyful -2.8).

Today the index fell from 19.3 in the first half of 2011 to just 7.4 in the back half last year. While it's great to see such an improvement, historically speaking, we’re still pretty damn miserable.

Interesting note: It used to be called simply, the Misery Index when it launched in the early 1970s, but later it was “augmented” to include fluctuating values in the housing market. I mean, what’s more miserable than watching your home’s value ebb and flow with the whims of the market?

About the author

Joel Patterson is the Associate Producer of Marketplace Money.
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