FICA Flops

Below is a chart that I sent out to my subscribers a couple of weeks ago. So, this is a sample of the kind of analysis you get when you subscribe (click chart to enlarge):


On the left side is the annual growth-rate of withholding-tax collections plotted daily for 2008. On the right side is the same metric plotted since November 1, 2015. As you can see, things have weakened badly over the last eight weeks.

This plot is similar to a very long moving-average, and it has only turned down twice since 1998: before the 2002 recession, and then before the 2008 recession. It takes a lot of deterioration to bend it over, so this is a significant development. The growth-rate will almost certainly continue to weaken going forward since shorter-term measures are in the 2% area as we speak.

Note: FICA/Payroll/Withholding taxes are reported every business day by the Treasury Department, so the annual growth-rate can be calculated each day for the trailing year.