[expat_panama]

Thanks Foo,-- I was just checking into this and I was thinking that it's simply astounding how the doomers can moan no matter what good news comes out. 

At first I was surprised that CNN and Reuters were actually allowing good news to slip out, but when I dug up the actual report from the fed (Complete file PDF (478 KB) I began to catch the 'rest of the story'.  Namely, the MSM acts like this is some kind of sudden economic resuscitation in the 'third quarter'-- in fact, this has been going on for quite a while.

It's weird how when ever you ask anyone about business, they always say 'I'm doing great but everyone else is broke" --it's because everyone really is doing great but they're getting their info from Dan Rather and Willie Green. 

The professional pessimists constantly rant about the 'death of the middle class', outsourcing, deficits, illegal immigration.   At the same time the American family has been socking it away.   Dang, if this is the economic catastrophy we've been hearing about, who need's prosperity?

[Southack]

"The professional pessimists constantly rant about the 'death of the middle class', outsourcing, deficits, illegal immigration. At the same time the American family has been socking it away. Dang, if this is the economic catastrophy we've been hearing about, who need's prosperity?"

$161,767.00 in net wealth for every man, woman, and child in the U.S. is beyond "prosperity" so far as to warrant the term "rich."

There's never been national wealth at this level in any country in all of world history.

[remember]

It's weird how when ever you ask anyone about business, they always say 'I'm doing great but everyone else is broke" --it's because everyone really is doing great but they're getting their info from Dan Rather and Willie Green.

The professional pessimists constantly rant about the 'death of the middle class', outsourcing, deficits, illegal immigration. At the same time the American family has been socking it away. Dang, if this is the economic catastrophy we've been hearing about, who need's prosperity?

Since this report says nothing about the distribution of wealth, it likewise says nothing about the health of the middle class. In addition, I notice that the media has still not learned how to correct numbers for inflation. I took a closer look at the report and used it to generate the following table:

            TOTAL NET WORTH OF HOUSEHOLDS AND NONPROFIT ORGANIZATIONS
                              (billions of dollars)

            Total                             Major                            Major
              Net constant   % of    Euros Currency                   $ per Currency
Year Qtr    Worth   2000 $    GDP    (bil)   2000 $    CPI      GDP    Euro    Index
---- ---  -------  -------  -----  -------  -------  -----  -------  ------  -------
1993      24188.9  28825.8  363.3  21721.4  21504.1  144.5   6657.4  1.1136  92.0083
1994      24841.8  28864.8  351.3  20067.7  20898.2  148.2   7072.2  1.2379  87.0656
1995      27709.9  31310.0  374.6  21988.5  23145.5  152.4   7397.7  1.2602  86.4478
1996      30297.5  33251.9  387.6  25047.5  26356.4  156.9   7816.9  1.2096  90.0327
1997      34039.9  36521.3  409.9  31318.3  32392.0  160.5   8304.3  1.0869  98.4853
1998      37523.7  39641.6  429.0  32373.1  34250.2  163.0   8747.0  1.1591  94.4668
1999      42444.8  43871.5  458.0  41896.0  39393.6  166.6   9268.4  1.0131  96.0556
2000      42073.9  42073.9  428.6  44874.0  42073.9  172.2   9817.0  0.9376 103.4955
2001      41258.3  40116.8  407.4  46714.6  44329.6  177.1  10128.0  0.8832 111.1998
2002      39617.7  37922.0  377.8  37297.8  37806.4  179.9  10487.0  1.0622  98.7638
2003  Q1  39623.2  37284.8  368.8  36478.7  37007.3  183.0  10744.6  1.0862  96.6628
      Q2  41400.1  38815.4  380.4  36427.7  37173.1  183.7  10884.0  1.1365  92.9284
      Q3  42248.5  39417.7  380.0  36066.7  36248.1  184.6  11116.7  1.1714  88.7965
      Q4  44582.6  41587.9  395.6  35276.6  36344.5  184.6  11270.9  1.2638  84.3714
2004  Q1  45352.5  41927.5  395.3  37828.4  38307.4  186.3  11472.6  1.1989  87.4184
      Q2  46018.1  41942.4  394.8  37516.8  38418.9  188.9  11657.5  1.2266  86.4048
      Q3  46589.7  42314.1  394.3  37250.9  37928.0  189.6  11814.9  1.2507  84.2542
      Q4  48525.4  43810.2  405.5  36977.4  38004.7  190.7  11967.0  1.3123  81.0568

Note: Euro exchange rate before 1999 is Foreign Exchange Rate: Euro Community
Source: Flow of Funds Accounts of the United States, Q4 2004, Tables B.100, B.100.e,
        online at http://www.federalreserve.gov/releases/Z1/Current/z1.pdf;
        2004 Economic Report of the President, Tables B-1 and B-60;
        http://research.stlouisfed.org/fred2/series/EXUSEC/downloaddata/EXUSEC.txt;
        http://research.stlouisfed.org/fred2/series/EXUSEU/downloaddata/EXUSEU.txt;
        http://research.stlouisfed.org/fred2/series/TWEXMMTH/downloaddata/TWEXMMTH.txt

As can be seen, after adjusting for inflation, total net worth is slightly below the high that it reached at the end of 1999. As a percentage of GDP, it is 88.5 percent of its 1999 high. Most interesting, perhaps, is the value of total net worth in terms of foreign currencies. Measured in Euros, total net worth is about 79 percent of the high that it reached at the end of 2001. Adjusted using the Trade Weighted Exchange Index for Major Currencies, net worth is about 86 percent of its 2001 high. Hence, we should look at the numbers a little more closely before we spend too much on ice cream and party hats.