"The pay TV industry has reported its worst 12-month stretch ever," analysts Craig Moffett andMichael Nathanson wrote in a report yesterday. Cable is in a free fall, led by Time Warner Cable's horrendous quarter, in which it lost 306,000 homes while it blacked out CBS over carriage fees.

Quartz's Ritchie King, who absolutely has the best graphics on this phenomenon, charts the big picture. First, look right: Netflix is on a tear. Then left: The pay-TV business is clutching the 100-million-household bar like a baby sloth, as cable implodes but satellite and telco (e.g.: Verizon, AT&T) subs make up the difference.

One story you could tell with these figures is that Americans really are cutting the cable TV cord. Maybe.

But maybe the story is more complicated than that. The number of Americans signing up for Netflix, Hulu, and other sites is growing much faster than the number of Americans leaving pay-TV altogether. Most Internet TV is complementing, not replacing, the cable bundle.

The biggest threat to pay-TV isn't the Internet, it's the economy. Pay-TV sign-ups tend to track household formation—TVs go in houses—and housing formation (that is, people moving into new apartments and home) tends to track the U.S. economy. In the last year, we've added just 380,000 new households, barely a third of the annual average of 1.1 million. That's awful. So awful, in fact, that when you account for household formation, the pace of "cord-cutting" is actually declining.*