Depending on whether you believe the IFS or Ed Balls, the jury is out on Reagan’s question of “are you better off than you were four years ago”. One barometer that cannot be statistically disputed however is the question of whether or not we should, based on economic indicators, be more miserable than we were in 2010. There has been a clear decline in Guido’s Misery Index during this parliament and we should be happier today than we have ever been in the last five years.
Cameron and Osborne inherited an unemployment rate of 7.9% when they took office, a number which rose as high as 8.4% in March 2012 but has now fallen to a low of 5.7%, the lowest since 2008.
Falling inflation should make us happier. Though the Retail Price Index remained around 5% for the first year or so of this government, it then embarked on a steady decline reaching a current low of 1.1% in February.
Today’s very slightly revised GDP figures – up from 0.5% growth in the last quarter of last year to 0.6% – also contribute. While the Public Sector Net Cash Requirement – the individual monthly borrowing requirement – this month stands at zero. When we are borrowing less, we should all be much happier.
On all four measures of the Misery Index, there has been an improvement under this government, albeit small. Guido started our version of the traditional Misery Index – it is actually a variation on the Robert Barro version of the original Misery Index created by economist Arthur Okun – back before the last general election. Adding in the PSNR to the composite to give the deficit reduction objective of the government some weight. Are we happier than we were five years ago? Statistically the numbers say yes…