Economic misery index exceeds that under Roh MH gov`t

The economic misery index, which measures the people’s economic hardship in their daily lives, rose to a 10-year high in the first quarter of this year, showing a similar level to that of the 2008 global financial crisis.

A Dong-A Ilbo analysis based on Statistics Korea data also found that the economic pain felt by the people is bigger under the incumbent Lee Myung-bak administration than under its predecessor. The jump was mainly due to skyrocketing prices and worsening unemployment.

Dong-A’s misery index was 9.0 in both February and March this year, the highest since March 2001 (9.1) when the bursting of the IT bubble led to venture companies collapses and a jump in the number of jobless. The index remained the same level as in July 2008, just before the global financial crisis erupted.

Created by Arthur Okun, an economist at the Washington-based think tank Brookings Institution, the misery index measures the economic well-being and livelihood of the people based on inflation and unemployment levels. Korea’s figure hit a historic high of 15.6 for three consecutive months in 1998 from February to April in the aftermath of the Asian currency crisis.

From February 2008, when the Lee administration started, through May this year, the index posted a monthly average of 7.1, higher than 6.5 under the former Roh Moo-hyun administration. Public utility charges are set to go up in the second half of the year, public fears of inflation are growing, and job market conditions are unlikely to improve much due to slow economic recovery.

Unless proper measures are taken, the index could rise to the level of 8.3 under the Kim Dae-jung administration.

The sharp rise this year after a stable reading of 5-7 until last year is mainly due to surging inflation and unemployment. Consumer inflation has remained high at more than 4 percent for five straight months this year. The jobless rate was 4.5 percent in February and 4.3 percent in March this year, up from the 3-percent range over the same period last year.

Lee Tae-keun, a research fellow at LG Economic Research Institute, said, “The misery index is widely used because it measures the people’s economic hardships by simply combining the inflation and unemployment rates. The higher the figure, the more people feel pinched. By considering only the index, the people’s economic pain is similar to that during the global financial crisis.”

Other countries are also facing a rise in the misery index. U.S. business news channel CNBC said the U.S. misery index was 12.7 in May, the worst since 1983.

witness@donga.com achim@donga.com