Inflation explained in 3 charts

During the 1970s, the last sustained period of inflation, economist Arthur Okun invented the misery index — the sum of inflation and unemployment.

The big picture: The index peaked at 21.2% in 1980; its low point was 5.76% in January 2020, just before the pandemic.

• Thanks to falling unemployment, the misery index now stands at 9.2%. That's lower than the level of misery seen in the four years following the Great Recession of 2008, but it's still high by the standards of recent decades.

Homeowners might not be unhappy with rising inflation.

Why it matters: Not only are houses a reasonably good inflation hedge in and of themselves, but anybody with a mortgage — about 50 million households — will see the real value of that mortgage eaten away by inflation.

Homebuyers, in particular, have never had it so good. In real terms, the 15-year mortgage rate is now negative — the first time that's ever happened.

• When mortgage rates fall into negative territory, borrowers end up paying back less, in real terms, than they borrowed in the first place.
• Note for nerds: What I'm doing in the chart above is taking the 15-year mortgage rate and subtracting the 10-year TIPS breakeven rate, which is the amount of inflation that the market expects to see over the next 10 years. That's roughly the amount of time that borrowers tend to hold a mortgage.

Another beneficiary of recent inflation — specifically asset-price inflation — has been household balance sheets, writes Axios' Kate Marino. Americans' net worth has now reached nearly six times the country’s gross domestic product.

• The past two decades of growth in net worth are mostly due to the appreciation of assets like real estate and equities — not to the accumulation of savings, according to a new report out from McKinsey Global Institute.