Matt Trivisonno looks at real time payroll withholding taxes on a year over year basis. He calls it the “greatest economic indicator of all time.

Hyperbole aside, it is a pretty interesting data series. Here are Matt’s comments from last week:

“Viewing the job market through the withholding-tax data, we see steady year-over-year growth continuing from February to March.>

First quarter withholding-tax collections came in strong with a 5% annual growth rate. (2011 looks weak on this chart because of the tax cut.):


Calendar March was up only 2.64%, however there was one less business day in the month this year. Using a daily average instead, calendar March was up 7.30%. However, the calendar is a little askew because of leap year, so 7.30% is likely over-optimistic. If instead, we look at the data in 4-week time-periods, we see that the annual growth rate was 4.2% for weeks 9-12:



Friday’s “Employment Situation” report (a.k.a. “Non-Farm Payrolls”) is derived from surveys done during the “reference period”. That’s the week which contains the 12th of the month. For the March report coming out on April 6th, that’s week #11 of 2012. Comparing to week #11 from last year, we see a 4.05% growth rate:



Withholding-Tax Collections Continued Strong in March
Daily Jobs Update, by Matt Trivisonno

Category: Data Analysis, Economy, Employment, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

15 Responses to “Withholding-Tax Collections Continued Strong in March”

  1. [...] Tax withholdings were strong in March.  (Big Picture) [...]

  2. obsvr-1 says:

    probably need to subtract out the 2% increase in income due to the payroll (SS) tax reduction (Stimulus plan X).

  3. RC says:

    I think Tax withholding does indeed provide a much accurate picture of employment situation. Lets keep in mind that there are always revisions on the published NFP number in the following NFP report. We have had revisions of more than 100,000 already in the first 2 reports of 2012.

  4. Iamthe50percent says:

    Also keep in mind the withholding tax “holidays”. The chart needs to be adjusted for changes in the rate.

  5. spencer says:

    So withholding taxes are up 4% and average weekly earnings are up 2.7% and nominal personal income is up
    some 3%. Within the personal income report wage and salary disburements are up over 5%.

    Is that enough of a difference to be significant?

  6. johnl says:

    Trimstabs also follows this data and they don’t seem as up beat.
    Is there anything that happened with payroll witholdings a year ago Jan. that could skew the data??



    BR: Trimtabs has been simply awful since 2007

  7. Mark Down says:

    Chart this, Gulfstream Park up 80 million in total handle compare to last year !!!!

  8. Dima says:

    Saying that you have real time payroll tax withholdings is inaccurate. ALL payroll tax withholdings are deposited after the fact. Some payroll taxes are deposited one day later, some a few days later and some as long as six weeks later. Most small businesses deposit their payroll taxes once a month.

    So – if hiring is picking up – then are corporate profits decreasing due to increasing wage costs?

  9. Dow says:

    I must be missing something because the year over year chart at the website shows 2011 into 2012 in a steady and steep decline.

  10. me says:

    I see withholdings. If CEOs are making the big bucks then tax withholodings would be up. The telling number would beFICA tax withholodings that account for the little guys, or real workers.

  11. VennData says:

    Dima, only those that pay monthly. If you pay weekly or bi-weejly as most do, you get very up-to-date data.

    Dow, that is the rate of increase, not the actual level.

  12. Futuredome says:

    UE is also derived from this as well. Which is why a upward revision of 50,000-75,000 is likely to match LPR, 120,000 wasn’t enough to lower UE. Don’t forget this gets revised every 5 years after the 2nd and 3rd revision.

    NFP and BEA stats get way to much press. While they are fun to look at in retrospect, they suck as near term indicators.

  13. Is the data deflated?

  14. Bridget says:

    Wonder what this means about what the 1% are up to…..mayhaps exercising their stock options before 2013?

  15. craig.r.jackson says:

    I think employment is a lagging indicator. Those charts don’t appear to be very predictive.