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Measuring misery

The mandate of the Federal Reserve calls for stable prices and maximum employment. One way to assess these conditions is to look at the consumer price index inflation rate and the unemployment rate, respectively. It has even become somewhat popular to look at the sum of these two measures, the so-called “misery index,” shown here. Now, you may not consider the “misery” of inflation to be entirely equivalent to the “misery” of unemployment. So, if you believe that a multiplier should apply to one of these two measures, you can use a custom formula to transform the series in the FRED graph.

How this graph was created: On the FRED homepage, you’ll see CPI (among other popular series): Click on that to open the related FRED graph. Add the series “Civilian Unemployment Rate,” making sure to use the “Modify existing data series” option. Then change the units for the first series to “Percent Change from Year Ago” and create your own data transformation with formula a+b or any other formula you find appropriate.

Suggested by Christian Zimmermann

View on FRED, series used in this post: CPIAUCSL, UNRATE

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