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Weakening Federal Withholding Tax Collections Do Not Bode Well For Employment

This report is an excerpt from the permanent Employment Chart page

The edge that Federal Withholding Tax collections had held over last year continued to narrow last week, suggesting a weakening employment picture in May.

The chart below compares current withholding tax collections with last year on the same date. This year collections have been running slightly ahead of last year in nominal terms. As of May 17, collections for the prior 10 business days were 3% greater than last year. A month ago, the edge was 4%. The 1 month moving average was 2.4% higher than last year. At the end of April the 1 month moving average was 4.2% higher than last year.

Federal Withholding Taxes Daily

Federal Withholding Taxes Daily - Click to enlarge

 

This chart looks at the year to year change in withholding in real terms, adjusted by the average weekly wage data from the BLS.  On this score, following a bulge in March that was probably due to mutual fund withholding for capital gains distributions, the comparison is now slightly negative in real terms which does not bode well for employment in May. The employment surveys are taken for the week which includes the 12th day of the month.  In real terms, adjusted for the increase in average weekly earnings, the current week was down 1.4% versus the same week last year. That does not bode well for the coming jobs reports for May.

Real Federal Withholding Taxes - Click to enlarge

Real Federal Withholding Taxes - Click to enlarge

These 2 charts are updated and analyzed weekly in the Professional Edition Treasury update  in conjunction with their implications for employment, and in particular  the Federal deficit and Treasury supply.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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