The Federal Reserve released its “Flow of Funds” report Thursday.
zzzzzzzz….. Wake up. You’ll like these numbers reported in yesterday’s Wall Street Journal (link requires subscription; bolds are mine):
(Household) net worth increased 2.6% (10.6% annualized–Ed.) to a record $51.1 trillion in the quarter, the 12th straight increase …..
Net worth has risen because the value of household assets, such as stock holdings and the value of homes themselves, has increased faster than household debts, including mortgages. Net worth measures household assets minus liabilities.
….. Across the whole economy, household net worth in the third quarter rose to about 5.65 times disposable personal income, the highest level since 2000′s final quarter.
Meanwhile, U.S. corporate profits outpaced business investment, the Fed said. The financing gap — the amount of money companies must raise externally to finance their capital expenditures — was negative $197.5 billion in the quarter, a record. The previous record of negative $59.3 billion was in the second quarter.
In a separate editorial later in the week (requires subscription), The Journal noted that household net worth has increased $10 trillion since the Bush tax cuts took effect in 2003. That’s a 24% increase in roughly 2-1/2 years. The negative financing gap means that companies were, on the whole, able to finance their capital expansions out of profits instead of borrowing money or selling stock.
What about debt? It’s going up, but not alarmingly in relation to asset values:
WASHINGTON (AFX) — Americans increased their household debt at an annual rate of 11.6% in the third quarter, the fastest growth in 18 years, the Federal Reserve said Thursday in its quarterly flow of funds report.
Total outstanding debt in the household sector rose to $11 trillion.
….. In the household sector, borrowing was paced by real estate loans. Mortgage debt grew at a 14% pace, while credit card debt increased 5.4%.
Household assets are $62.1 trillion (that number minus the $11 trillion in debt results in the $51.1 trillion in household net worth). Even if debt levels continue to increase at a slightly faster rate than asset values, household net worths will still continue to increase significantly.
None of the above was considered newsworthy by the WORMs (Worn-out Reactionary Media, known to most as The Mainstream Press). The proof: A Google News search on “household net worth” (in quotes) sorted by date yielded the following (subscription publications like The Wall Street Journal are not included in Google News searches):
While there are five listings related to this news (the first and last items above cover other stories, and are included to show that the search picked up every relevant item), there are only two underlying stories. Investors Business Daily and Marketwatch carried one (written by MarketWatch, which is owned by The Wall Street Journal), and the other three (one example linked) carried a story by London-based AFXexpress.com. Of the five listings, only one headlines the household net worth news.
With record-breaking economic news, The Associated Press didn’t even bother to write a story, or if they did, no one bothered to pick it up. The “all the news that’s fit to print” NY Times, Washington Post, and LA Times didn’t cover it either.
You can only conclude that for the WORMs, good economic news is really not news.
UPDATE: How embarrassing–The Chinese Peoples Daily Online picked up the story early Saturday morning US time. Still nothing from the WORMs. Scooped by the ChiComs. Also, the a Bloomberg item from yesterday on gold noted above mentions only the net worth increase, and without any specific numbers, in the story’s last paragraph.
UPDATE 2: Dr. Sanity has a great post on this with two cartoons that are side-splitters.
Dec. 10: Wizbang Weekend Carnival participant.