The 2006 Real (after Inflation) Increase in Household Net Worth Was Greater Than 2005′s — But You Wouldn’t Know That from Reading the Associated Press’s Accounts. And this is not the first time AP has ignored what’s “real.”
Here is how the Federal Reserve’s report on household net worth was covered by AP reporter Jeannine Aversa (bold is mine):
Net Worth of U.S. Households Skyrockets in Final Quarter of 2006
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 â€” 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.
For all of last year, households’ net worth rose by 7.4 percent, a slower pace than the 7.9 percent increase registered in 2005.
AP made 2006 look worse than 2005, when 2006 was better. “Really.”
The real growth in net worth after inflation for 2006 was 4.9% (7.4% above minus 2.5% inflation [Dec. 2006's reading of 201.8 is greater than Dec. 2005's reading of 196.8 by 2.54%; go to this link for the data, and select the very first report]), compared to 4.5% in 2005 (7.9% above minus 3.4% inflation [Dec. 2005's reading of 196.8 is greater than Dec. 2004's reading of 190.3 by 3.41%]). This means that 2006 was better for growth in REAL household net worth, NOT “a slower pace.”
This is not the first time an AP report has made it appear that a 2006 economic performance indicator was worse than 2005, and “really” wasn’t. This previous post shows that an AP reporter took a lower nominal gain in retail sales in 2006 compared to 2005 and concluded that 2006 was a slower year for retail sales. As with the above household net worth situation, the truth was that after considering inflation, the real increase in 2006 retail sales was better than 2005.
Somebody needs to tell AP’s business reporters that what is real is all that “really” counts.
Cross-posted at NewsBusters.org.