Aug

19

In response to the President’s rant, the data shows that Payroll Tax Receipt growth turned negative in March 2022. Despite an “almost” rally last Christmas season, the Payroll Tax growth has been negative the entire time. The data shows the current rate of decline at ~2 percent per annum. Given the vehemence of the rant, any government official who might be tempted to say otherwise might lose his/her career. Reminds one of “The Emperor’s New Clothes”.

Ayn Rand: We can ignore reality, but we cannot ignore the consequences of ignoring reality.

Bud Conrad comments:

Your work on taxes is the best I've seen. It is a bit of a tle cycle indicator confirming economic slowing. as seen in the standard government numbers below.

So has the government hidden that we are in a recession with cooked up numbers, say from understated inflation so real GDP looks more positive than it really is? and that unemployment is low from birth death over additions to jobs, and disabilities not in the workforce?

Bill Rafter responds:

IMO it’s misdirection. The government picks something on which they want us (and the media) to focus. Usually it’s the unemployment rate, which is determined by a poll, and then they have the birth/death adjustment (i.e. the fudge factor). So it’s impossible to get a definitive “just the facts, ma'am” story if the gummint wants otherwise.

Regarding leads/lags, the payroll tax receipts numbers are accumulated electronically. There have been days when Treasury was closed, but the data was released anyway (automatically). That data is released with a one-day lag from when it hits the Treasury bank account.

The raw Payroll Tax Receipts data just looks like static. To make sense it must be seasonally adjusted (it’s highly seasonal). That is why it is ignored by gummint and the media, because they do not know how to seasonally adjust the data. MRL and DB have shops that work with the data and their output is barely intelligible.

Stefan Jovanovich adds:

As Bill knows better than any of us, "employment" is the category box that compels the people writing the checks to add contributions to the American-Prussian scheme that protects the worker through unemployment payments. Neither self-employment (i.e. real estate brokers) nor independent contractor (Uber drivers) is a worker category that requires employment tax payments or has eligibility for unemployment.

Larry Williams writes:

I would argue, with vigor, that stocks predict tax receipts; it is not the other way around. Lead time is a little over one quarter. Stocks (red) lead receipts:

Steve Ellison writes:

Anecdotally, having been removed from a payroll a few months ago, I am having the most difficult job hunt of my life, not at all what I would have expected given the headline unemployment rate of 3.5% (I'm an experienced data analyst with a passion for finding truth and extracting insights that lead to actions and better business decisions. I have thorough knowledge of data warehousing, SQL, optimizing queries in big data environments, and data visualization). Boston Consulting, where I know a partner, laid off 20% of its workforce this year.

Despite the sanguine reports from the BLS, Pete Earle examined state-level data in May and found rising trends in initial claims for unemployment and in WARN filings (advance notices of layoffs as required by the Worker Adjustment and Retraining Notification Act).

Stefan Jovanovich comments:

There is also the problem of delay. The Census produces a count of the receipts of what they call "Non-Employer" entities using income tax returns. Everyone who is self-employed and reports income as an individual separate from any business dba and everyone who is an independent contractor falls into this category. Today the Bureau proudly announced that "we tentatively plan to release the 2021 Non-employer Statistics estimates in the spring of 2024."


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