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The official numbers produce a current Misery Index of only 8.9 - inflation of 3.9% plus unemployment of 5%. That's not far from the Misery Index's low of 6.1 seen in 1998.
But using the estimates on CPI and unemployment from economists skeptical of the government numbers, the Misery Index is actually in the teens. Some worry it could even approach the post-World War II record of 20.6 in 1980.
"We're looking at government numbers that are really out of whack," said Kevin Phillips, author of the book "Bad Money."
No inflation if you don't eat or drive
According to the government's most recent Consumer Price Index, a key inflation reading, consumer prices rose 3.9% in the 12 months ending in April, down slightly from the 4% annual inflation rate in March despite record gasoline prices.
But Phillips argues that consumer prices are probably up at least 5% and perhaps more than 10%.
Part of the disconnect may be due to the fact that nondurable goods, such as food and gasoline, makes up only 12% of CPI.
In addition, food and energy prices are eliminated from the so-called core CPI, which many economists tend to focus more closely on because they claim food and gas prices are volatile.
But food and energy costs are a very important part of household budgets. And those prices have been skyrocketing: Gas prices were up about 21% over the 12 months ending in April.
Underlying economic and banking system fundamentals rapidly are getting worse, not suddenly better as touted in Wall Street's fantasies. Another tall tale is of the Fed's valiant fight against recession, while containing inflation. Now that the economy has been turned, the story goes, the Fed can slowdown or eliminate its easing so as to concentrate on its inflation fight. What nonsense! The Fed's primary concern remains preventing a systemic financial collapse; everything else is secondary. The Fed has very limited ability at present either to stimulate the economy or to contain inflation, despite severe problems in both areas.