That’s right folks. Alan Greenspan and Ben Bernanke somehow couldn’t see a housing bubble over the years 2002-2006 even as it grew to $8 trillion, threatening the U.S. and world economy. But, NPR goes them one better. It still hasn’t noticed the housing bubble.

Morning Edition had a segment on consumer spending which never once mentioned the generation of $8 trillion in housing wealth by the bubble and the subsequent loss of close to $6 trillion in wealth as the bubble collapsed. This matters because of the housing wealth effect. This is usually estimated at between 5-7 cents on the dollar, meaning that homeowners will increase their annual consumption by between 5 and 7 percent of their housing wealth.

That implies that the bubble generated between $400 billion and $560 billion of annual consumption. With the loss of housing bubble wealth, we should expect consumption to fall back by roughly this amount. (The loss of $6 trillion in stock wealth would amplify this effect.)

But, that’s not what they say at NPR. At NPR it is just a matter of consumer attitudes. This piece is a serious entry for the Pulitzer for bad reporting.

–Dean Baker

Dean Baker is senior economist at the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, including Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Read more about Dean.