Last month I wondered: Is the Stock Market a Barometer for Consumer Bankruptcy Filings? 
In exploring this concept further, I came across “the Misery Index” which is an economic indicator created by economist Arthur Oken in the 1960s. It is the sum of the unemployment rate and inflation at any given time.
Since it is assumed that both a higher rate of unemployment and a worsening of inflation create economic and social costs for a country, the higher the index, the greater the misery the country is facing.
A recent New York Times Economix Blog post discussed the Misery Index and commented that pairing these two indicators made sense not only because both are economic phenomena that hurt regular people, but also because efforts to reduce unemployment can elevate inflation, and vice versa.
Today there are large numbers of bankruptcy filings; however, the inflation rate is rather low. Thus, this Misery Index does not predict bankruptcy, nor does it necessarily predict the misery of the average middle-class American. What we need is a different Misery Index.
New Economic Misery Index Contains Bankruptcy as an Indicator
It appears that some economists have come up with a “New Economic Misery Index which includes five sectors that show financial pain for Americans: Bankruptcy, Credit Access, Employment, Housing and Food Stamps.
Today, we have a more insidious version of economic crisis than what the old Misery Test measured. This is not necessarily what is good for the average American. In other words, the stock market may be going up, but Americans are still losing jobs and suffering. We therefore need to add a few more indicators to a new misery index.
The new five indicators are probably the best way to gauge the state of our economy. Economists looking at these figures see that despite the activity on Wall Street, there is really very little recovery. And that is what the typical middle-class American who comes to my office for a bankruptcy consultation can attest to.