Weird…

WASHINGTON - The net worth of U.S. households climbed to a record high in the final quarter of last year, boosted mostly by gains on stocks, the Federal Reserve reported Thursday.

Net worth — the difference between households’ total assets, such as houses and bank accounts, and their total liabilities, such as mortgages and credit card debt, totaled $55.6 trillion in the October-to-December quarter.

That marked a 2.5 percent growth rate from the third quarter, the previous quarterly record high. Stocks gains helped fuel the increase in net worth, although real-estate gains played a role, too.

This is odd news indeed given that the AP, the same folks responsible for the article above, actually invoked the memory of the Great Depression in an article about Americans spending too much and saving too little.  The previous AP article used savings rate data from the commerce department to indicate that Americans are spending way more than they are saving.  Yet what I pointed out at the time is that the Commerce Department numbers fail to take into account purchased real estate and stocks as assets.  Instead, the Commerce Department numbers looks at those expenditures as though they were merely purchases with no acquired value.

That’s obviously a highly misleading way of looking at the numbers.  When you buy stock in a company you’ve acquired something with value that you can sell again.  Same with real estate.  Each time you make a mortgage payment you buy a little more equity in your home.  You are getting something of value in return for money, but according to the Commerce Department (and the media reporting on its released numbers) buying a house or buying some stock is no different than buying a hot dog.

Were so many reporters not economically illiterate we could have been spared all that nonsense about the second coming of the Great Depression last month.  Unfortunately, many reporters are economically illiterate.  Or at least favor sensational headlines about impending financial doom over headlines that actually, you know, reflect reality.