Therefore except for the most simple of government reports (i.e. weekly job claims) almost everything out of government is something I ignore. And even those simple reports have "seasonal adjustments" which impugn the data. I much rather prefer to listen to what companies have to say; i.e. let me listen to what 15 retailers are saying rather than the "monthly government retail spending report". That said, we can't ignore this data because the herd that is Wall Street now lurches up and down on a daily basis to this or that data point, as if report X changes the course of the entire economy.
One area that is quasi government but should be clean (and simple) is income tax withholdings - it is simple enough. People work, they pay taxes, it gets withheld. There is not much the government can do to mess this one up. According to TrimTabs if one reviews the data we are seeing from income tax withholdings, the "2nd derivative improvement" thesis is once more.. a farce.
I do not know when the "wisdom of the crowd" that is the stock market stops believing in the 13th iteration of the "consumer is back - we just know it" and "everything will be fine... in 6 months" but it has been using that tired game plan over and over since early 2008. Eventually they will be correct; after being wrong countless times. I believe they are still wrong; in the past when they finally acknowledge they were wrong the market swooned.
- Notwithstanding the so-called green shoots that appear to be popping up in various series of economic statistics, other numbers show things to be withering, if not rotting outright. What's more these data are not seasonally adjusted or otherwise fudged. They're tax receipts, and nobody pays taxes on phony, phantom jobs or earnings.
- According to Trim Tabs, income-tax withholdings in the past four weeks are down 6.1% from a year ago; in the last two weeks, they're down an even bigger 8.1% from last year. That marks a sharp deterioration from May, when income-tax withholdings were off "only" 4.8% from a year ago.
- "The deterioration in growth since May indicates wage declines and job losses have accelerated," according to note to TrimTabs' clients.
- Meanwhile, "other" taxes were down 39.5% year-on-year, down from 33.6% in May. Corporate income taxes were down 35% from a year ago in the latest four weeks after having been down 12.3% year-on-year in May.
- TrimTabs' numbers corroborate the dismal numbers on state personal tax revenues, which were down 26% in first four months of the 2009 from a year earlier.
- According to the Nelson A. Rockefeller Institute of Government, 34 of 37 states that submitted data reported declines. Arizona, one of the epicenters of the housing collapse, saw the biggest drop, a stunning 55%. The Nos. 2 and 3 states were South Carolina and Michigan, with declines of 38.6% and 34.4%, respectively. California, whose massive budget woes are front and center, had the fourth-highest decline, at 33.8%.
- Not only do plunging tax revenues tighten the fiscal vise on the federal, state and municipal coffers, they provide unambiguous confirmation of the truly dire straits of the economy.
