ChartBrief #13 European Misery Index

ChartBrief #13 European Misery Index

ChartBrief #13 European Misery Index

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The latest Eurozone unemployment and inflation data were just released with the unemployment rate still stuck at 10.1% and headline inflation creeping up to 0.4% y/y (0.2% previous, and core inflation at 0.8%).  Whenever I see the unemployment rate and inflation rate in close proximity I think of the “Misery Index” – the sum of the two, so what better opportunity than to put a graph up of the European Misery Index!

European Misery Index
European Misery Index

The chart shows the misery index for the Eurozone  (unemployment rate + core CPI inflation rate) — inverted (so higher misery is in the lower part of the graph).  Reason I invert it is because I also have the Eurozone consumer confidence index on there and strangely enough the consumer confidence index tends to correlate pretty well with the misery index.  This makes sense, a falling unemployment rate and relatively contained inflation makes life easier for consumers, whereas high unemployment and/or high inflation makes life tough and so consumer confidence should be lower in that environment.  In order for the misery index to continue to head higher inflation needs to actually not go higher, as the ECB would like, and the unemployment rate would need to continue down (seems to have stalled recently)… Neither seem likely to move much in the near term, so consumer confidence is also likely to be range bound around current levels.

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Bottom line: The Eurozone Misery Index has improved to around its long term average, but further improvement may be hard to come by.


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Topdown Charts: "chart driven macro insights" Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends. Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme. As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities. Callum Thomas Head of Research Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.
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