. But the eclipse of the inflation figure is emblematic of a larger story, which is that the U.S. economy has done a lot better in the past year than most experts expected. This development, however, has largely failed to penetrate the public consciousness. With inflation down and unemployment at 3.7 per cent, the so-called misery index, which combines these two rates, is at 7.7 per cent. In January, 2021, when Joe Biden was inaugurated, the misery index was also at 7.7 per cent.
This is largely because, despite the inflation rate falling over all in the past year, many individual prices still remain considerably higher than they were when Biden took office. “Economists tend to look at the rate of change of prices, rather than price levels,” Bernard Yaros, an economist at Moody’s Analytics, told me, on Friday. “Inflation is important, partly because it helps determine what the Federal Reserve will do. But most people tend to look at price levels.
Yaros has looked at consumer prices over all and calculated where they would be now if they had increased at the same pace that they did in the ten years before 2020. According to his calculations, prices are about ten per cent above trend. “I think people see prices are ten per cent higher than they should have been, and they think, I am ten per cent poorer than I was,” he said. Economically speaking, that conclusion doesn’t necessarily make sense.