And I don't mean "deep thought" level critique and understanding. More like following a paragraph and understanding what is being said.
"Literacy"? Not really. AFAIK, there's the "functional literacy" term for that.
Being able to read road signs and the like?
In an idiocracy, it doesn't.
Literacy meant more than simple being able to read and write on a technical level. (Not that most people not reading "even a book a year" can read and write coherently or "read the Economist" otherwise).
I do agree it would be better if people read more actual books but this seems like a degree of literacy issue while illiterate tends to mean "completely unable to read."
If you can read the words in an article, but don't understand what it says, should you really be considered literate?
Understanding what it says is not understanding the meanings of separate words, but the meaning of the text in question.