A proxy for nominal aggregate demand and payroll growth: Treasury receipts are recovering…
I present an update on aggregate demand using the highest frequency of economic data available, US Treasury tax receipts. Tax receipts serve as a proxy for nominal aggregate demand via a nominal indicator of private payroll growth.
US daily Treasury tax receipts are improving. (This chart has been modified since its original posting to enable reader to click to enlarge).
The chart illustrates the federal deposits of income and employment taxes that are recorded on a daily basis and presented here as the annual pace of the 30-day rolling sum. The red line illustrates the average annual growth rate spanning the period 2005-current.
Since roughly April of 2010, the annual pace of income and employment tax receipts has been above the average, 2.8%. In the third quarter, the annual pace of income and employment tax receipts remained around 4%, consistent with the second quarter pace. Hours and employment are improving, supporting wage gains and higher tax receipts. But more importantly, the pace of tax receipt growth has not faltered, demonstrating ongoing recovery in the labor market and consumer demand.
But it’s not enough. The gains in tax receipts are likely a function of firms adding back hours instead of pumping up the work force. (see my previous post with links on the “hourless recovery“).
The chart above illustrates the cyclical loss from recession and gains during the recovery of private net-jobs (payroll) and aggregate weekly hours (you can see the summary data from the September payroll report here).
Both series found a trough in the third quarter of 2009, which is consistent with the bottom in tax receipt growth (chart above). However, the hours index has recovered quicker than has its payroll counterpart (of course it fell farther, too). To date, both private hours and payroll are 7% short of their values at the peak of the economic cycle.
Receipts are growing, but not vigorously enough to indicate any shift in the current trajectory of payroll growth. Therefore, nominal aggregate demand remains weak. Furthermore, the still-nascent household deleveraging cycle is very likely moving at snail-speed (see this article for a discussion of the link between consumption growth, income growth, and deleveraging for today’s commentary).
Rebecca Wilder
Rebecca – “But more importantly, the pace of tax receipt growth has not faltered, demonstrating ongoing recovery in the labor market and consumer demand.”
I assume that you mean since April 2010.
We’re running behind last year’s Withheld Income and Employment Taxes fiscal year to date total. We ahead of last year’s monthly and fiscal year to date totals for Individual Income Taxes for August and September.
I was surprised to note the September 2008 monthly and fiscal year to date totals for Withheld Income and Employment Taxes, and also those for August 2007. Not sure what to make of August 2007 data.
Daily Treasury Statement
http://www.fms.treas.gov/dts/index.html
TABLE IV Federal Tax Deposits
This month To Date Fiscal Year To Date
Thursday September 30, 2010
Withheld Income and Employment Taxes $132,091 $1,661,562
Individual Income Taxes $2,198 $18,380
Wednesday September 30, 2009
Withheld Income and Employment Taxes $125,216 $1,672,573
Individual Income Taxes $1,546 $17,038
Tuesday September 30, 2008
Withheld Income and Employment Taxes $142,759 $1,792,395
Individual Income Taxes $2,322 $21,145
Friday September 28, 2007
Withheld Income and Employment Taxes $129,269 $1,724,421
Individual Income Taxes $2,366 $17,292
Friday September 29, 2006
Withheld Income and Employment Taxes $126,537 $1,617,535
Individual Income Taxes $2,179 $13,105
Friday September 30, 2005
Withheld Income and Employment Taxes $119,969 $1,509,675
Individual Income Taxes $1,388 $9,671
===========
TABLE IV Federal Tax Deposits
This month To Date Fiscal Year To Date
Monday August 30, 2010
Withheld Income and Employment Taxes $132,386 $1,526,373
Individual Income Taxes $326 $16,163
Monday August 31, 2009
Withheld Income and Employment Taxes $126,389 $1,547,357
Individual Income Taxes $238 $15,492
Friday August 29, 2008
Withheld Income and Employment Taxes $136,464 $1,649,636
Individual Income Taxes $317 $18,824
Friday August 31, 2007
Withheld Income and Employment Taxes $140,381 $1,595,152
Individual Income Taxes $171 $14,926
Thursday August 31, 2006
Withheld Income and Employment Taxes $129,547 $1,490,998
Individual Income Taxes $150 $10,925
Wednesday August 31, 2005
Withheld Income and Employment Taxes $129,568 $1,389,706
Individual Income Taxes $144 $8,283
We’re running behind last year’s Withheld Income and Employment Taxes fiscal year to date total. We ahead of last year’s monthly and fiscal year to date totals for Individual Income Taxes for August and September.
I was surprised to note the September 2008 monthly and fiscal year to date totals for Withheld Income and Employment Taxes, and also those for August 2007. Not sure why August 2007 totals were so strong. Perhaps someone can explain that.
Daily Treasury Statement
http://www.fms.treas.gov/dts/index.html
TABLE IV Federal Tax Deposits
In Millions
Month To Date Fiscal Year To Date
Thursday September 30, 2010
Withheld Income and Employment Taxes $132,091 $1,661,562
Individual Income Taxes $2,198 $18,380
Wednesday September 30, 2009
Withheld Income and Employment Taxes $125,216 $1,672,573
Individual Income Taxes $1,546 $17,038
Tuesday September 30, 2008
Withheld Income and Employment Taxes $142,759 $1,792,395
Individual Income Taxes $2,322 $21,145
Friday September 28, 2007
Withheld Income and Employment Taxes $129,269 $1,724,421
Individual Income Taxes $2,366 $17,292
Friday September 29, 2006
Withheld Income and Employment Taxes $126,537 $1,617,535
Individual Income Taxes $2,179 $13,105
Friday September 30, 2005
Withheld Income and Employment Taxes $119,969 $1,509,675
Individual Income Taxes $1,388 $9,671
===========
TABLE IV Federal Tax Deposits
In Millions
Month To Date Fiscal Year To Date
Monday August 30, 2010
Withheld Income and Employment Taxes $132,386 $1,526,373
Individual Income Taxes $326 $16,163
Monday August 31, 2009
Withheld Income and Employment Taxes $126,389 $1,547,357
Individual Income Taxes $238 $15,492
Friday August 29, 2008
Withheld Income and Employment Taxes $136,464 $1,649,636
Individual Income Taxes $317 $18,824
Friday August 31, 2007
Withheld Income and Employment Taxes $140,381 $1,595,152
Individual Income Taxes $171 $14,926
Thursday August 31, 2006
Withheld Income and Employment Taxes $129,547 $1,490,998
Individual Income Taxes $150 $10,925
Wednesday August 31, 2005
Withheld Income and Employment Taxes $129,568 $1,389,706
Individual Income Taxes $144 $8,283
What does the Treasury revenue data say about the fiscal year Federal budgets and deficit growth?
It stirkes me that the standard argument, “the massive decline in revenues is causing the huge growth in the fiscal year deficits”, may not hold up. Note the revenues for 2008.
Granted, one could scrub the monthly Treasury reports by line item and answer the revenue side of the question. It’s obvious that the FY 2009 decline in Individual Income Taxes and perhaps Withheld Income and Employment Taxes doesn’t explain away the deficit picture as some others have tried to paint. Sure, it’s part of the problem, but not necessarily the primary source of deficit growth.
Anyway, the issue is worth exploring in light of some commentary floating around the news media, and political opinions offered by officeholders, candidates, and various econ/financial experts.
What does the Treasury revenue data say about the fiscal year Federal budgets and deficit growth?
It stirkes me that one of the standard arguments, “the massive decline in revenues is causing the huge growth in the fiscal year deficits”, may not hold up. Note the revenues for 2008.
Granted, one could scrub the monthly Treasury reports by line item and answer the revenue side of the question. It’s obvious that the FY 2009 decline in Individual Income Taxes and perhaps Withheld Income and Employment Taxes doesn’t explain away the deficit picture as some others have tried to paint. Sure, it’s part of the problem, but not necessarily the primary source of deficit growth.
Anyway, the issue is worth exploring in light of some commentary floating around the news media, and political opinions offered by officeholders, candidates, and various econ/financial experts.
We’re running behind last year’s Withheld Income and Employment Taxes fiscal year to date total. We ahead of last year’s monthly and fiscal year to date totals for Individual Income Taxes for August and September.
I was surprised to note the September 2008 monthly and fiscal year to date totals for Withheld Income and Employment Taxes, and also those for August 2007. NOt sure why August 2007 totals were so strong. Perhaps someone can explain that.
Daily Treasury Statement
http://www.fms.treas.gov/dts/index.html
TABLE IV Federal Tax Deposits
In Millions
This month To Date Fiscal Year To Date
Thursday September 30, 2010
Withheld Income and Employment Taxes $132,091 $1,661,562
Individual Income Taxes $2,198 $18,380
Wednesday September 30, 2009
Withheld Income and Employment Taxes $125,216 $1,672,573
Individual Income Taxes $1,546 $17,038
Tuesday September 30, 2008
Withheld Income and Employment Taxes $142,759 $1,792,395
Individual Income Taxes $2,322 $21,145
Friday September 28, 2007
Withheld Income and Employment Taxes $129,269 $1,724,421
Individual Income Taxes $2,366 $17,292
Friday September 29, 2006
Withheld Income and Employment Taxes $126,537 $1,617,535
Individual Income Taxes $2,179 $13,105
Friday September 30, 2005
Withheld Income and Employment Taxes $119,969 $1,509,675
Individual Income Taxes $1,388 $9,671
We’re running behind last year’s Withheld Income and Employment Taxes fiscal year to date total. We ahead of last year’s monthly and fiscal year to date totals for Individual Income Taxes for August and September.
I was surprised to note the September 2008 monthly and fiscal year to date totals for Withheld Income and Employment Taxes, and also those for August 2007. NOt sure why August 2007 totals were so strong. Perhaps someone can explain that.
Daily Treasury Statement
http://www.fms.treas.gov/dts/index.html
TABLE IV Federal Tax Deposits
In Millions
This month To Date Fiscal Year To Date
Thursday September 30, 2010
Withheld Income and Employment Taxes $132,091 $1,661,562
Individual Income Taxes $2,198 $18,380
Wednesday September 30, 2009
Withheld Income and Employment Taxes $125,216 $1,672,573
Individual Income Taxes $1,546 $17,038
Tuesday September 30, 2008
Withheld Income and Employment Taxes $142,759 $1,792,395
Individual Income Taxes $2,322 $21,145
Friday September 28, 2007
Withheld Income and Employment Taxes $129,269 $1,724,421
Individual Income Taxes $2,366 $17,292
Friday September 29, 2006
Withheld Income and Employment Taxes $126,537 $1,617,535
Individual Income Taxes $2,179 $13,105
Friday September 30, 2005
Withheld Income and Employment Taxes $119,969 $1,509,675
Individual Income Taxes $1,388 $9,671
===========
TABLE IV Federal Tax Deposits
In Millions
This month To Date Fiscal Year To Date
Monday August 30, 2010
Withheld Income and Employment Taxes $132,386 $1,526,373
Individual Income Taxes $326 $16,163
Monday August 31, 2009
Withheld Income and Employment Taxes $126,389 $1,547,357
Individual Income Taxes $238 $15,492
Friday August 29, 2008
Withheld Income and Employment Taxes $136,464 $1,649,636
Individual Income Taxes $317 $18,824
Friday August 31, 2007
Withheld Income and Employment Taxes $140,381 $1,595,152
Individual Income Taxes $171 $14,926
Thursday August 31, 2006
Withheld Income and Employment Taxes $129,547 $1,490,998
Individual Income Taxes $150 $10,925
Wednesday August 31, 2005
Withheld Income and Employment Taxes $129,568 $1,389,706
Individual Income Taxes $144 $8,283
What does the Treasury revenue data say about the fiscal year Federal budgets and deficit growth?
It stirkes me that one of the standard arguments, “the massive decline in revenues is causing the huge growth in the fiscal year deficits”, may not hold up. Note the revenues for 2008.
Granted, one could scrub the monthly Treasury reports by line item and answer the revenue side of the question. It’s obvious that the FY 2009 decline in Individual Income Taxes and perhaps Withheld Income and Employment Taxes doesn’t explain away the deficit picture as some others have tried to paint. Sure, it’s part of the problem, but not necessarily the primary source of deficit growth.
Anyway, the issue is worth exploring in light of some commentary floating around the news media, and political opinions offered by officeholders, candidates, and various econ/financial experts.
Federal revenue losses attributed to Withheld Income and Employment Taxes along with Individual Income Taxes aren’t large enough to account for more than roughly 10% of the fiscal year deficits we observed in FY 2009 and 2010.
Withheld Income and Employment Taxes
September End of Month
In Millions
2010 – $1,661,562
2009 – $1,672,573
2008 – $1,792,395
2007 – $1,724,421
2006 – $1,617,535
2005 – $1,509,675
Individual Income Taxes
September End of Month
In Millions
2010 – $18,380
2009 – $17,038
2008 – $21,145
2007 – $17,292
2006 – $13,105
2005 – $9,671
We fell short of FY2009’s Withheld Income and Employment Taxes fiscal year to date total in FY2010. We were ahead of FY2009’s monthly and fiscal year to date totals for Individual Income Taxes for August and September, FY2010.
I was surprised to note the September 2008 monthly and fiscal year to date totals for Withheld Income and Employment Taxes, and also those for August 2007. Not sure why August 2007 totals were so strong. Perhaps someone can explain that.
Daily Treasury Statement
http://www.fms.treas.gov/dts/index.html
TABLE IV Federal Tax Deposits
In Millions
Month To Date Fiscal Year To Date
Thursday September 30, 2010
Withheld Income and Employment Taxes $132,091 $1,661,562
Individual Income Taxes $2,198 $18,380
Wednesday September 30, 2009
Withheld Income and Employment Taxes $125,216 $1,672,573
Individual Income Taxes $1,546 $17,038
Tuesday September 30, 2008
Withheld Income and Employment Taxes $142,759 $1,792,395
Individual Income Taxes $2,322 $21,145
Friday September 28, 2007
Withheld Income and Employment Taxes $129,269 $1,724,421
Individual Income Taxes $2,366 $17,292
Friday September 29, 2006
Withheld Income and Employment Taxes $126,537 $1,617,535
Individual Income Taxes $2,179 $13,105
Friday September 30, 2005
Withheld Income and Employment Taxes $119,969 $1,509,675
Individual Income Taxes $1,388 $9,671
===========
TABLE IV Federal Tax Deposits
In Millions
Month To Date Fiscal Year To Date
Monday August 30, 2010
Withheld Income and Employment Taxes $132,386 $1,526,373
Individual Income Taxes $326 $16,163
Monday August 31, 2009
Withheld Income and Employment Taxes $126,389 $1,547,357
Individual Income Taxes $238 $15,492
Friday August 29, 2008
Withheld Income and Employment Taxes $136,464 $1,649,636
Individual Income Taxes $317 $18,824
Friday August 31, 2007
Withheld Income and Employment Taxes $140,381 $1,595,152
Individual Income Taxes $171 $14,926
Thursday August 31, 2006
Withheld Income and Employment Taxes $129,547 $1,490,998
Individual Income Taxes $150 $10,925
Wednesday August 31, 2005
Withheld Income and Employment Taxes $129,568 $1,389,706
Individual Income Taxes $144 $8,283
What does the Treasury revenue data say about the fiscal year Federal budgets and deficit growth?
It stirkes me that one of the standard arguments, “the massive decline in revenues is causing the huge growth in the fiscal year deficits”, may not hold up. Note the revenues for 2008.
Granted, one could scrub the monthly Treasury reports by line item and answer the revenue side of the question. It’s obvious that the FY 2009 decline in Individual Income Taxes and perhaps Withheld Income and Employment Taxes doesn’t explain away the deficit picture as some others have tried to paint. Sure, it’s part of the problem, but not necessarily the primary source of deficit growth.
Anyway, the issue is worth exploring in light of some commentary floating around the news media, and political opinions offered by officeholders, candidates, and various econ/financial experts.
Federal revenue losses attributed to Withheld Income and Employment Taxes along with Individual Income Taxes aren’t large enough to account for more than roughly 10% of the fiscal year deficits observed in FY 2009 and 2010.
Withheld Income and Employment Taxes
September End of Month
In Millions
2010 – $1,661,562
2009 – $1,672,573
2008 – $1,792,395
2007 – $1,724,421
2006 – $1,617,535
2005 – $1,509,675
Individual Income Taxes
September End of Month
In Millions
2010 – $18,380
2009 – $17,038
2008 – $21,145
2007 – $17,292
2006 – $13,105
2005 – $9,671
A good many versions of any political story end up being told, depending on how well the teller understands the facts of the story, as well as how honest the story may be. The story about the causes of the deficit that is closest to the facts is that the structural deficit, as it exists and as it is projected into the future on the assumption that the Bush-era tax cuts are maintained, is that Medicare Part D and the tax cuts are the main culprits, with interest on the debt becoming a bigger issue over time. As the law now stands, tax cuts decline in importance, but Part D does not.
The cyclical deficit is another matter, and ought to be. We want automatic stabilizers to work, and that means expanding spending and cutting back on revenue during slowdowns. We have also had active fiscal policy, and that means expanding spending and cutting back on revenues even more. In fact, policy makes using revenue as a metric of economic performance a bit problematic. A different set of policies now should mean different performance from revenues, performance that is not necessarily comparable to earlier periods.