At Least The Wall Street Journal Thinks It Is A Bullish Sign

Moments ago I posted some comments regarding the economic news released by the Federal Reserve yesterday. I wondered why so little has been written about this; why there has been no ticker tape parade.

My faith is restored in my gut reactions. I thought it was a big story. It turns out that The Wall Street Journal also considers it a big story, talking about it in a story int he front section of the newspaper: Americans continue to regain lost wealth, (a subtle reminder to Proust, I assume).

The stage could be set for stronger economic growth next year, as a surging stock market and run-up in home values have helped Americans recoup nearly all the wealth they lost in the recession.

The net worth of U.S. households and nonprofit organizations—the values of homes, stocks and other assets minus debts and other liabilities—rose 2.6%, or about $1.9 trillion, in the third quarter of 2013 to $77.3 trillion, the highest on record, according to the Federal Reserve.

The Fed's figures aren't adjusted for inflation, but even after accounting for rising costs—using the Fed's preferred inflation gauge—Americans' net worth is at record levels. The figures also aren't adjusted for population growth, and the nation's wealth is roughly 1% short of its peak according to another commonly used gauge, the consumer-price index.

Still, the report shows American households' finances are making up more of the ground lost during the recession, which ran from December 2007 through June 2009, and that fundamental economic improvements are reaching more people. After four years of slow growth, economists expect output to grow faster next year, partly because rebounding home prices and stocks are making more Americans feel wealthier—a trend that, in turn, could make them more inclined to borrow and spend, giving the economy a lift.

We'll get a chance to see how many "points" are baked into "the Dow" now that it is beyond dispute that tapering will begin, certainly by February, and possibly earlier. My hunch is Ben Bernanke would like to announce he is tapering -- it will be a nice feather in his cap. Although I've never seen him wear a cap, much less put a feather in it.