Investor’s Business Daily gives a smackdown to all the journalists responsible for those “SAVINGS AT AN ALL TIME LOW!!” and “WE’RE NEARING THE GREAT DEPRESSION AGAIN!!” I posted about yesterday:

Savings at 74-year low,” screams one headline. “Baby-boom crisis,” shouts another. No question, the savings rate is low. Time to panic? No, time to stop fretting about a statistic of such marginal importance.

‘People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago,” went the lead on the Associated Press story, typical of many others like it. But nothing could be more misleading.

It seems the media and even some economists who should know better have no problem pushing the panic button over any data that suggest the economy is struggling — but studiously ignore anything that suggests we’re actually thriving economically. . . .

How could savings be so high when we’re constantly told it’s at Depression-era lows? Easy. The scare stories focus solely on personal savings, failing to take into account the savings of households, businesses and government. When those are added in, we have an enormous amount of money at our disposal. . . .

Most working Americans sock away a portion of their paycheck each month into a 401(k). This comes out of pretax income. But since the savings rate is derived by subtracting personal consumption from disposable income — that is, after-tax income — the money built up in these accounts isn’t counted. Yet, 401(k) and similar savings plans totaled about $3.2 trillion at the end of 2005.

How about housing? To many — if not most — people, a house isn’t just a place to live. It’s a form of long-term saving, an investment we can either pass on to our children or cash in after we retire.

For the purpose of calculating savings, the money we put out for our mortgages each month is treated as consumption. In other words, your home may be savings to you, but you’re treated by the government’s accounting as if you were a renter.

Worse, the savings rate doesn’t include a lot of things that should, by logic, be counted in any meaningful measure of savings. Like capital gains on stocks and houses, equity in private businesses, and the gains from mortgage refinancings, which often end up invested.

As my buddy Bart Hinkle put it, “[Not counting investments and mortgage payments] like saying Americans don’t eat enough but forgetting to factor in lunch and dinner.”

Quite right.  But then, headlines like “Americans Well-Fed” and “Americans Saving Plenty” don’t catch as many eyeballs.