Shocking Deceleration of Payroll-Tax Growth

That’s the title of an email that I sent out to my Daily Jobs Update subscribers on August 3, 2015. At the time, the Dow stood at 17,598. What happened next? KABOOM! That’s what. It’s been pretty much straight downhill since then with the Dow shedding 1,138 points by the time of this writing. Here is the payroll-tax chart that I sent (click to enlarge):


The chart is made by taking a quarter-over-quarter growth rate of federal withholding-tax collections every day, and then applying a moving-average.

Note that the vertical axis starts at 3.5% instead of zero, so the growth-rate was still positive, though way off the 6% peak in February.

Has the data continued to plunge since I made the chart three weeks ago? Good question; for the answer simply subscribe to The Daily Jobs Update.

Record Payroll-Tax Receipts in March

As you probably know, the world ended on Friday morning when we learned that only 126,000 jobs were created in March, and the Dow futures dropped 165 points. However, I’m going to go out on a limb and predict that that number will be revised higher eventually. Why would I do that? Because America’s payrolls were fatter in March than any other month in history. The Treasury Department withheld a gargantuan $218 billion dollars from the paychecks of American workers. That cannot happen unless there are a whole lot of workers. Here’s the Daily Treasury Statement (click to enlarge):


March topped the previous record set in December 2014, and was a solid 6.8% higher than the former record month of March 2014. Here’s a chart from the good folks at (that would be me) showing the record-breaking months:


Note: the y axis begins at 150 billion so the the relative size of the bars are exaggerated.

Notice that the record set in December 2007 (left-most bar) lasted for five years. Since then, new records have been set every December and March. Payrolls are very seasonal; the retail industry staffs-up in December, and in March there are 31 days, no holidays, nobody goes on vacation, teachers are at work, and many banks pay out their bonuses.

So, March is always strong, but this March crushed last March, so things are obviously still popping. Perhaps the economy is like Wile E. Coyote in that moment when he goes over the cliff but has yet to whoosh down. And maybe you are thinking that a moving average of the withholding-tax data would shed some light, and you would be right. So why not go over to and have a look-see?

Don’t expect Zero Edge to report this; that would be against their “Death to America” mandate from the Kremlin. 🙂 Besides, Rick Santelli is busy snorting coke off of “Tyler Durden’s” ass as they celebrate Friday’s futures plunge.

Note to bloggers: you may use the chart above as long as you include a link to this page.

Nailed It – Jobs Up, Market Down

On Friday morning (3/8/15) everybody was surprised when the jobs report blew away estimates. Economists were expecting 230,000 new jobs, and the BLS reported +295,000. Before the shock could wear off, people were shocked again as the raging bull market “celebrated” the good news by plunging. The DJIA closed down 279 points.

People were turned every which way but loose, except for a small elite group of investors who were advised of this exact scenario three full days prior by an email sent by your hero (that would be me in case you are confused on the subject).

How did I do it? Well, economists were frightened by rising unemployment-claims, but just because some people get laid off doesn’t mean that other people aren’t getting hired. And the soaring withholding-tax data that I follow at The Daily Jobs Update was rocketing upward. So, the stage was set for a big surprise – a surprise that would shock investors into visions of Janet Yellen taking away their punch bowl.

While I didn’t cure cancer or deliver world peace, one of the aforementioned elite investors described my call as “beautiful” and “masterful.”

The moral of the story is that you should subscribe to The Daily Jobs Update and gain access to this esoteric, and invaluable, real-time economic indicator.

New Withholding-Tax Collection Record

On Monday, March 2, 2015, the IRS set a new single-day, withholding-tax collection record by raking in $38.02 billion from the paychecks of American workers. Take a look at the Daily Treasury Statement (click to enlarge):


The previous record was set a year ago at $35.5 billion. See my report here. I know this is a record because I have daily data going back to 10/1/1998 in my database at The Daily Jobs Update where you can see charts of this data updated in real time.

So, does this mean that the jobs market is on fire? If you subscribe to DJU, look in your inbox for an email containing my thoughts on how the West Coast port strike, and minimum-wage increases may have affected this data.

Another Tax-Collection Record

A month ago, I reported on a new single-day record for withholding-tax collections, and some people thought that it was just an anomaly. Well guess what? That record has been smashed. The February 4th record was $32.241 billion, and yesterday, March 3rd, the IRS raked in $35.500 billion from the paychecks of American workers. Here is Table IV from today’s release of The Daily Treasury Statement:


A jump in collections such as this is practically impossible without a substantial expansion in payrolls. Despite weakness in recent non-farm payrolls reports, the annual growth rate of withholding-tax collections is actually accelerating.

How much is $35.5 billion? It’s 18 times bigger than Ukraine’s annual defense budget. It’s enough to buy three Ford-class super-carriers, which retail at $11.3 billion (fighter jets not included).

Gerald R. Ford super-carrier.

Gerald R. Ford super-carrier.