My understanding was that it was more that words can be concatenated into new words in German which is not so much a stereotype as more a misunderstanding of fact. I.e. You wouldn't think much about something like enjoyable-comuppence but schadenfreude looks more impressive without the hyphen.
I would argue it's not the exact same thing. Sure, when overdone then you would get the same. But the way it is, commonly used concatenated words are words, not just hyphenated words. They are used as words and without an extra though people don't parse them into separate parts, unlike they do with a list of words with hyphens.
E.g. you don't think of firefighter as fire-fighter in ordinary usage.
There's also the other implication that the (East) Germans were Soviet just 35 years ago.
But yes. We Americans know Germans more for their silly big words. But statements like that can be misinterpreted as the German perspective of themselves doesn't quite match the American stereotypes.
