And by the way, despite the current slowdown, during the five years of the Iraq war the U.S. economy has performed remarkably well. Real GDP has increased by 16 percent, or 3 percent annually. The unemployment rate has hovered below a historically low 5 percent for quite some time. Nearly 10 million jobs have been created. Household net worth has increased by $20 trillion.
When I read that line about net wealth rising by $20 trillion, I had to say to myself – here we go again. Has household net wealth increased by $20 trillion over five years? No – not even in nominal terms as the increase by that metric was only $18.65 trillion. In real terms, aggregate net wealth at the end of 2007 was only $10.74 trillion more than it was at the end of 2002. But lest we forget, the stock market had gone through a significant decline from early 2000 to the end of 2002. If we compare real net wealth at the end of 2007 to real net wealth at the end of 1999, it increased by only $5 trillion, which represented an 11.6% increase over the eight-year period. Over the same period, population grew by 8.1%. In other words, real per capita net wealth (2000$) grew from around $154 thousand as of 1999 to $159 thousand as of 2007. A 3.25% increase in real net wealth per capita over an eight-year period does not sound that dramatic.
Yes – it seems that Jerry Bowyer, David Malpass, and John Tamny are all as stupid as Lawrence Kudlow when reporting increases in net wealth. How many times do we have to point out to this cast of village idiots that when comparing wealth over time, it would be useful to not only do so in real rather than nominal terms but also to do so in terms of per capita wealth? Is this cast of clowns really this incredibly stupid – or do they just assume that their readers are morons?