My withholding tax charts were one of the very first things that I published on this blog when I started it two years ago. But you don’t have to take my word for it. You can look at this post on Barry Ritholtz’s blog from May 15, 2008. That post shows one of my second-derivative charts pinpointing the beginning of the recession. Here it is:
Barry published my charts several times and always gave me full credit. He is a stand-up guy. Karl Denninger? Not so much. He published my chart without asking and did not link to my site. John Mauldin? He just plain stole my chart.
But now look at Joe LaVorgna of Deutsche Bank using my exact technique. It looks like he traced one of my charts with a crayon. Compare his crude chart to one of my highly detailed charts (click to enlarge):
(That chart goes through November 30th. My subscribers can see the real-time chart at www.DailyJobsUpdate.com.)
During the Summer of 2009, LaVorgna appeared several times on Larry Kudlow’s CNBC TV show and predicted upside surprises showing job-creation in the BLS’s “Employment Situation” report. He got it wrong every time, and gave up after a few months. It was an embarrassingly bad performance for such a heralded economist. And now he has embarrassed himself even worse. My charts have been all over the financial blog-o-sphere for two years. Everybody knows that this is my technique. It was very foolish of him to not give me credit.
You can read a criticism of LaVorgna’s analysis, and this technique in general, on this page. I agree with Wildebeest that LaVorgna is getting it wrong again, still being too optimistic.
However Wildebeest is missing the point of this technique. The US economy turns very slowly. From the MacArthur Causeway in Miami, you can watch huge cruise ships turning around in a giant watery cul-de-sac called a “turning basin”. It takes a long time; they turn very slowly. But once they have turned, they can sail out of the port. That is the exact type of turn that this technique is designed to depict.
Look back at my big chart above. For several months in 2002, there was “no progress” in withholding tax receipts. But the ship was turning, was it not?
At the moment, withholding taxes are still down year-over-year. That’s the raw data. But there might be real improvement after you adjust for the “Making Work Pay” tax credit. I have a detailed analysis on this page. I also provide charts of the raw data, and the adjusted data so that you can make your own judgements. Don’t forget that of the three people reporting on the withholding data, TrimTabs, LaVorgna, and myself, I am the only one who doesn’t run a hedge fund. So, not only do I proclaim to have the best analysis, but I also claim to be the only objective analyst.
(Note to perps: as you may have noticed in the links above, your infringing pages have been archived at WebCite and elsewhere. So, don’t bother editing your websites. Permanent copies exist. Take that weasels!)
(Note to fledgling bloggers: if you are trying to get your blog on the map, and have something that Barry might be interested in, by all means send it to him. If he publishes it, not only will you get full credit, but you will also get a link which will bring a torrent of traffic from his huge audience.)