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Federal Withholding-Tax Collections Decline in Q2

Posted By Guest Author On July 6, 2012 @ 12:00 pm In Data Analysis,Taxes and Policy | Comments Disabled

Matt Trivisonno [1] looks at real time payroll withholding taxes [2] on a year over year basis. He calls it the “greatest economic indicator of all time.

The first chart shows that federal withholding-tax collections declined to an annual growth rate of 3.4% in the second quarter from a rate of 5.1% in the first quarter.




However, due to the way the calendar works, that deceleration is likely exaggerated. The second chart shows the second-derivative of the growth rate. It plots the Q/Q rate each day for the quarter ending on that date. And since the nature of the calendar causes this calculation to also be spiky, I have add a 10-bar moving average to smooth things out (red line).





So, as you can see, the true growth-rate looks to be steady at around 4%.  That’s a respectable rate, though nothing to write home about.

We have seen a number of economic indicators portraying slowing-growth.

However, the withholding-tax data is not yet exhibiting any sign of job losses.

Note: The first two quarters of 2012 on the first chart look much stronger than those of 2011, but that is only because there was a big tax-cut in 2011.


Matt Trivisonno
DailyJobsUpdate [5]

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2012/07/federal-withholding-tax-collections-decline-in-q2/

URLs in this post:

[1] Matt Trivisonno: http://www.trivisonno.com/

[2] payroll withholding taxes: http://www.dailyjobsupdate.com/

[3] Image: http://www.ritholtz.com/blog/wp-content/uploads/2012/07/Quarterly.jpg

[4] Image: http://www.ritholtz.com/blog/wp-content/uploads/2012/07/Trailing.jpg

[5] DailyJobsUpdate: http://www.DailyJobsUpdate.com

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