Are we seeing another round of 'stagflation?'
Stagflation is stagnant economic growth combined with high inflation. We're not nearly as bad off yet as we were in the '70s when it comes to stagflation. Remember the "misery index?" It's what you get when you add the inflation and unemployment rates. It even has its own Web site: www.miseryindex.us.
According to the site, the misery index in the mid-1970s to early '80s ranged from about 13 percent to 20 percent. Right now, it's just shy of 11 percent.
So, as far as economic pain goes, we'd have a ways to go before saying things are as bad as the '70s and early '80s.
That logic makes some sense to Angela Humbert of Bloomington, who recalls tough times in the '70s. By contrast, she feels like she's mostly doing OK now -- she has a solid job as an executive assistant and feels relatively unscathed by high food and gas prices.
MPR News is Member Supported
What does that mean? The news, analysis and community conversation found here is funded by donations from individuals. Make a gift of any amount today to support this resource for everyone.
But there is another issue that makes Humbert feel like the economy today is more perilous than it was in the '70s.
"It's this health care thing that's hanging over my head," she said.
Humbert's job doesn't provide health insurance. She's gone without coverage since 2001. At age 54, that makes her worried, so she would like to sign up for a plan.
But price spikes on that front are making her nervous.
"I took a look at the same health insurance plan that I priced three years ago, and the price has gone up and the benefit has gone down," Humbert said.
In this economy, she isn't expecting any pay increases that would offset those rising premiums.
Inflation in the cost of health care and insurance is a big problem, according to Roger Feldman, a health care economist at the University of Minnesota.
Feldman said those costs are not only much greater than they were during the tough economic times of the '70s and early '80s. They're also increasing at a rate greater than general inflation.
To demonstrate, Feldman points to the average cost of a health care plan for a single, U of M employee in 1980. Back then, such a plan ran less than $40 a month.
In the '70s, health insurance premiums weren't a big factor. Now they have added a lot more cost and a lot more economic insecurity.
"Now the cheapest plan available to me costs $470 a month. That's more than a 10-fold increase in more than 28 years," he said.
In that particular example, Feldman said the price increase far outpaces general inflation.
What's more, Feldman notes, the cost of medical care -- such as doctor visits and hospitalizations that uninsured people might pay for out of pocket -- has also risen at a rate higher than inflation since 1980.
"If we think of the prices of all goods and services going up three times since 1980, the price of medical care services going up five times, and the price of insurance premiums up 10 times, I think now we have some really good comparisons," said Feldman.
That can be especially tough for the unemployed who lack insurance, in part because it's taking longer to find a job. From 2000 to 2006, unemployed people collected jobless benefits about 10 percent longer on average than during the '70s.
Feldman said it makes sense to him that the health insurance piece would make people feel like times are tougher now than in the '70s and '80s.
"In the '70s, health insurance premiums weren't a big factor, and now they have added a lot more cost and a lot more economic insecurity," Feldman said. "I think that could help explain why the Consumer Confidence Index and a number of other indexes looking at consumer optimism or pessimism are at historically low levels, even though the economy still hasn't officially gone into a recession."
Feldman said this feeds a sense of insecurity about jobs and health insurance, even if people don't face any immediate threats of losing either one.
That pretty much sums up how Annie Culver of Cannon Falls feels. She works as a pharmacist and sees her job as secure. But she worries about losing health insurance, even though she got by without it for years in the 1970s.
The contrast between then and now makes her think today's economy is more precarious.
"In the late '70s, I was 30 years younger and really healthy, so the fact that I didn't have health care insurance didn't scare me," Culver said. "Though I'm still really healthy, I know how fragile I am as a human being. And I see the potential of my health failing as I get older, so health insurance is a much bigger priority for me. So I do feel scared about it."
Part of the problem, Culver said, is that at age 52, she simply has more to lose, and that alone makes the economy automatically feel scarier.