Citi’s Chief U.S. Equity Strategist Tobias Levkovich just released his Chart of the Month, which includes a new metric to measure economic dissatisfaction.Levkovich argues that the traditional Misery Index — the sum of inflation and unemployment — failed to adequately represent the poor state of the economy due to persisting low levels of inflation.
He believes a better indicator of financial well being is the cumulative total of the year-over-year change in the unemployment rate and those enrolled in the supplemental nutrition assistance program (SNAP):
Rising unemployment can be depressing but receiving supplemental support for basic food can be even more debilitating. Thus, combining the two may provide a better sense of general economic satisfaction
Citi’s graph of the month, shown below, compares this New Misery Index to the S&P500:
Even as unemployment remains stubbornly high, SNAP participation growth has been plunging.
“In this context, things have improved from their worst levels but they remain above average,” writes Levkovich.
And as a bullish equity strategist, he’s encouraged by the trend.
“This new Index continues to be on a downward trajectory, which should support higher stock prices.”