This paper examines the impact of macroeconomic movements on the happiness of nations, using data from a quarter of a million Europeans and Americans. The study finds that happiness levels are monotonically increasing in income and exhibit similar structures across different countries. It also shows that changes in reported well-being are correlated with shifts in macroeconomic variables such as GDP, even after controlling for personal characteristics, country fixed effects, year dummies, and country-specific time trends. The paper establishes that recessions have significant psychic losses beyond the decline in GDP and rise in unemployment. Additionally, it finds that higher unemployment benefits are associated with higher national well-being, challenging the notion that generous welfare states make life too easy for the unemployed. The study provides a new method to measure the costs of business cycle downturns, suggesting that recessions have substantial indirect effects on well-being.This paper examines the impact of macroeconomic movements on the happiness of nations, using data from a quarter of a million Europeans and Americans. The study finds that happiness levels are monotonically increasing in income and exhibit similar structures across different countries. It also shows that changes in reported well-being are correlated with shifts in macroeconomic variables such as GDP, even after controlling for personal characteristics, country fixed effects, year dummies, and country-specific time trends. The paper establishes that recessions have significant psychic losses beyond the decline in GDP and rise in unemployment. Additionally, it finds that higher unemployment benefits are associated with higher national well-being, challenging the notion that generous welfare states make life too easy for the unemployed. The study provides a new method to measure the costs of business cycle downturns, suggesting that recessions have substantial indirect effects on well-being.