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.

Spot-Check My 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.


8 Responses to “Withholding Taxes Chart”

  1. John Fischer Says:

    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

  2. admin Says:

    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

  3. curlydan Says:

    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?)

  4. admin Says:

    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

  5. Paul Says:

    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.

  6. admin Says:

    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

  7. Jagmohan Swain Says:

    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.

  8. admin Says:

    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