Withholding Taxes Chart
Note: While the second quarter came in stronger than first, I do not consider that to be any sort of turn-around. On the annual chart below, you can see that the drop-off from 2007 is still much larger than 2001’s drop-off from 2002. So, this supposedly “short and shallow” recession is looking a good deal worse than the last recession.
Current through the Daily Treasury Statement dated August 18, 2008.
Note: 3Q08 is calculated with the first 34 data points of 3Q08 and 3Q07. This
number will bounce around less as we move through the quarter. See the spreadsheet below to follow the calculation day-by-day. The three bars on the right are the first 3 quarters of 2008
Note: 2008 is a year-to-date comparision between the first 160 data points of 2008 and 2007.
What is This?
Each business day, the United States Treasury Department publishes a report on the workings of the government’s income and spending. One of the items on this report is the “Withheld Income and Employment Taxes.” (Here in the USA, workers have taxes automatically deducted from each paycheck.) This project charts this data.
You can check my data by entering a year or month into the form above, and clicking the Submit button.
The total for that period will be calculated from the daily totals and shown above when the page reloads. Then you can pull up the appropriate report and see if it matches.
Examples:
2008 for the entire year.
2008-03 for March of 2008.
Remember that the federal fiscal year begins in October. So, to find the annual total for 2007 for example, you need to pull up the report for the last day of September 2007. Also, keep in mind that the Treasury’s numbers don’t ’round to totals’, so totals are often off by a little bit.
About the Data
Note: All of the charts and numbers here are nominal dollars.
The government publishes this data promptly at 4pm Eastern time each business day - the same time that the stock market closes in New York City. I am usually at my computer then, and plug-in the new number.
Drill-Down on the Third Quarter 2008 Calculation
On the spreadsheet below, you can see the up-coming numbers from the third quarter of 2007 that we will be comparing against.
Column 1 is the business-day number in the quarter.
Columns 3-5 are the year-ago quarter we are comparing against.
Columns 6-8 are the data from this quarter so far.
The Total columns are the running totals for each quarter.
The % column is the year-over-year growth rate that appears on the chart above. It is calculated from the two Total columns. Reading down the column, you see what the number has been for each day of the quarter, and the last number is the one that is on the chart now.
| Day | Date | Tax | Total | Date | Tax | Total | % |
|---|---|---|---|---|---|---|---|
| 1 | 2007-07-02 | 22,060 | 22,060 | 2008-07-01 | 12,942 | 12,942 | -41.33 |
| 2 | 2007-07-03 | 4,095 | 26,155 | 2008-07-02 | 9,889 | 22,831 | -12.71 |
| 3 | 2007-07-05 | 8,463 | 34,618 | 2008-07-03 | 3,648 | 26,479 | -23.51 |
| 4 | 2007-07-06 | 4,947 | 39,565 | 2008-07-07 | 14,330 | 40,809 | 3.14 |
| 5 | 2007-07-09 | 9,638 | 49,203 | 2008-07-08 | 2,066 | 42,875 | -12.86 |
| 6 | 2007-07-10 | 1,580 | 50,783 | 2008-07-09 | 5,912 | 48,787 | -3.93 |
| 7 | 2007-07-11 | 6,909 | 57,692 | 2008-07-10 | 1,888 | 50,675 | -12.16 |
| 8 | 2007-07-12 | 1,791 | 59,483 | 2008-07-11 | 6,170 | 56,845 | -4.43 |
| 9 | 2007-07-13 | 6,838 | 66,321 | 2008-07-14 | 9,895 | 66,740 | 0.63 |
| 10 | 2007-07-16 | 17,252 | 83,573 | 2008-07-15 | 4,884 | 71,624 | -14.3 |
| 11 | 2007-07-17 | 2,702 | 86,275 | 2008-07-16 | 12,571 | 84,195 | -2.41 |
| 12 | 2007-07-18 | 7,504 | 93,779 | 2008-07-17 | 2,312 | 86,507 | -7.75 |
| 13 | 2007-07-19 | 1,945 | 95,724 | 2008-07-18 | 6,948 | 93,455 | -2.37 |
| 14 | 2007-07-20 | 5,252 | 100,976 | 2008-07-21 | 9,433 | 102,888 | 1.89 |
| 15 | 2007-07-23 | 9,707 | 110,683 | 2008-07-22 | 1,812 | 104,700 | -5.41 |
| 16 | 2007-07-24 | 1,757 | 112,440 | 2008-07-23 | 6,746 | 111,446 | -0.88 |
| 17 | 2007-07-25 | 6,221 | 118,661 | 2008-07-24 | 1,931 | 113,377 | -4.45 |
| 18 | 2007-07-26 | 2,358 | 121,019 | 2008-07-25 | 5,777 | 119,154 | -1.54 |
| 19 | 2007-07-27 | 6,104 | 127,123 | 2008-07-28 | 11,215 | 130,369 | 2.55 |
| 20 | 2007-07-30 | 9,886 | 137,009 | 2008-07-29 | 1,935 | 132,304 | -3.43 |
| 21 | 2007-07-31 | 4,012 | 141,021 | 2008-07-30 | 6,560 | 138,864 | -1.53 |
| 22 | 2007-08-01 | 16,218 | 157,239 | 2008-07-31 | 4,099 | 142,963 | -9.08 |
| 23 | 2007-08-02 | 4,847 | 162,086 | 2008-08-01 | 15,610 | 158,573 | -2.17 |
| 24 | 2007-08-03 | 7,415 | 169,501 | 2008-08-04 | 11,861 | 170,434 | 0.55 |
| 25 | 2007-08-06 | 9,013 | 178,514 | 2008-08-05 | 1,969 | 172,403 | -3.42 |
| 26 | 2007-08-07 | 2,086 | 180,600 | 2008-08-06 | 8,751 | 181,154 | 0.31 |
| 27 | 2007-08-08 | 6,449 | 187,049 | 2008-08-07 | 1,863 | 183,017 | -2.16 |
| 28 | 2007-08-09 | 1,709 | 188,758 | 2008-08-08 | 6,082 | 189,099 | 0.18 |
| 29 | 2007-08-10 | 5,450 | 194,208 | 2008-08-11 | 10,511 | 199,610 | 2.78 |
| 30 | 2007-08-13 | 9,947 | 204,155 | 2008-08-12 | 2,524 | 202,134 | -0.99 |
| 31 | 2007-08-14 | 2,051 | 206,206 | 2008-08-13 | 5,825 | 207,959 | 0.85 |
| 32 | 2007-08-15 | 7,996 | 214,202 | 2008-08-14 | 1,838 | 209,797 | -2.06 |
| 33 | 2007-08-16 | 8,239 | 222,441 | 2008-08-15 | 7,190 | 216,987 | -2.45 |
| 34 | 2007-08-17 | 4,930 | 227,371 | 2008-08-18 | 16,071 | 233,058 | 2.5 |
| 35 | 2007-08-20 | 9,136 | 236,507 | ||||
| 36 | 2007-08-21 | 2,380 | 238,887 | ||||
| 37 | 2007-08-22 | 8,010 | 246,897 | ||||
| 38 | 2007-08-23 | 2,483 | 249,380 | ||||
| 39 | 2007-08-24 | 5,487 | 254,867 | ||||
| 40 | 2007-08-27 | 10,206 | 265,073 | ||||
| 41 | 2007-08-28 | 1,953 | 267,026 | ||||
| 42 | 2007-08-29 | 6,044 | 273,070 | ||||
| 43 | 2007-08-30 | 1,746 | 274,816 | ||||
| 44 | 2007-08-31 | 6,585 | 281,401 | ||||
| 45 | 2007-09-04 | 20,145 | 301,546 | ||||
| 46 | 2007-09-05 | 4,475 | 306,021 | ||||
| 47 | 2007-09-06 | 7,569 | 313,590 | ||||
| 48 | 2007-09-07 | 5,626 | 319,216 | ||||
| 49 | 2007-09-10 | 9,534 | 328,750 | ||||
| 50 | 2007-09-11 | 2,730 | 331,480 | ||||
| 51 | 2007-09-12 | 6,316 | 337,796 | ||||
| 52 | 2007-09-13 | 1,815 | 339,611 | ||||
| 53 | 2007-09-14 | 5,646 | 345,257 | ||||
| 54 | 2007-09-17 | 18,286 | 363,543 | ||||
| 55 | 2007-09-18 | 1,711 | 365,254 | ||||
| 56 | 2007-09-19 | 7,869 | 373,123 | ||||
| 57 | 2007-09-20 | 2,051 | 375,174 | ||||
| 58 | 2007-09-21 | 6,255 | 381,429 | ||||
| 59 | 2007-09-24 | 10,946 | 392,375 | ||||
| 60 | 2007-09-25 | 2,349 | 394,724 | ||||
| 61 | 2007-09-26 | 6,664 | 401,388 | ||||
| 62 | 2007-09-27 | 2,172 | 403,560 | ||||
| 63 | 2007-09-28 | 7,112 | 410,672 |
During 2001, and then again in 2003, there were payroll tax cuts to help boost the economy. However, it looks like the majority of the plunge in withholdings in 2000 and 2001 happened before the tax cuts went into affect:
Economic Growth and Tax Relief Reconciliation Act of 2001.
Jobs and Growth Tax Relief Reconciliation Act of 2003
If we get more tax cuts this time around, it will probably be the same story since it takes the government so long to respond. But we will have to watch such an event very closely since it is likely to make the decline in withholdings look worse than it really is.
March 28th, 2008 at 8:21 am
Very interesting use of the Treasury Statement data!
I was going to do the following, but have not had the time — You might want to consider it:
enter the daily data into Xcel and do a least square fit using a polynomial equation (under the options tab). Pick a power of 2 for the first try. Get the equation and do a projection for the next 30 days of so. You also could take the derivative and look for a minimum. I’ve often done this with the S&P and it does have some reliability.
JJF
March 28th, 2008 at 5:29 pm
John,
Thank you for the kind words.
Do you think that this data can be analyzed the same way as the stock market? I’m thinking that there is a difference: this data is straight bean-counting, and the stock market is a matter of opinion - the collective opinion of investors, insiders, and traders.
Matt
May 2nd, 2008 at 3:13 pm
curious as to why you compare 5/1/2008 with 5/2/2007? Wouldn’t it be better to compare 5/1/08 with 5/3/07 (a true day-to-day comparison with 07 due to leap year?)
May 2nd, 2008 at 3:41 pm
curlydan,
I can see why you might think that the spreadsheet above is comparing day-to-day, but it really isn’t. The growth percentage is calculated from the running totals. Those two days are in the same row because they are both the 23rd business day of their respective quarters.
The leap day was in the first quarter, and we are only looking at the second quarters here.
Matt
May 4th, 2008 at 1:22 am
Very thought provoking material Matt.
Does the series include receipts of estimated self-employment taxes?
If not, how can we adjust for the growing trend in outsourcing?
thanks again for your fine work.
May 4th, 2008 at 9:27 am
Hi Paul,
This series is not adjusted in any way. I will investigate the outsourcing issue in the future, however I don’t think there is a big rush. This data series seems to still be working quite well as it has turned down abruptly along with just about every other economic indicator back around January.
Matt
May 7th, 2008 at 3:36 am
I am not sure how effective this indicator is.This is a lagging indicator because it’s based on employment.And employment always lags production which lags sales.Merely watching an indicator based on employment isn’t a great way to gauge the health of economy.The chart says 2002 there was negative growth in payroll taxes which is to be expected.But the economy infact had begun to turn around in Nov of 2001 and improved steadily in 2002.
May 7th, 2008 at 7:11 am
Hi Jagmohan,
I’m actually trying to predict the stock market rather than the economy. Perhaps the economy did turn in November 2001 as you say, but it wasn’t until a year later that the stock market turned up.
Perhaps leading indicators are not sufficient to break bear-market psychology. Maybe the market is only convinced after coincident and lagging indicators confirm the turn.
Matt