US federal personal tax receipts receipts are falling fast. So is the Evercore ISI State Tax Survey.
The last two times the survey plunged this much, the US was already in recession.
Is it different this time?
I like to credit my sources. I picked that chart up from Liz Ann Sonders, Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc.
In turn, Sonders picked that up from Evercore ISI.
I added the recession bars and comments.
Each month, Evercore conducts a State Tax Receipts Survey across 16 states capturing 64% of the US population.
Unlike Sonders, I am not willing to state second GDP quarter will likely be up vs. first quarter.
Second Quarter GDP Estimates
- New York Fed Nowcast June 3: 2.4% New York Fed Nowcast Up to 2.4% (I’ll Take “The Under”); Modeling Error on Unemployment Rate?
- Atlanta Fed GDPNow June 1: 2.5% GDPNow Forecast Dips to 2.5% Following Construction Report
- Markit June 3: 0.7% to 0.8% Composite PMI Flirts With Contraction; Markit Chief Economist Estimates GDP 0.7-0.8%
- ISM June 3: 1.6% Non-Manufacturing ISM Much Weaker Than Expected
Manufacturing Productivity
For productivity discussion, please see Productivity Declines 0.6%, Labor Costs Rise 4.5%; What’s Going On?
Recession?
Many things are outright screaming recession.
I expect huge revisions on numerous fronts. And I am not the only one.
For revision discussion, please see BLS Says Jobs Openings Up; Actually, Openings Falling Fast!
Mike “Mish” Shedlock
Also http://wolfstreet.com/2016/06/08/linkedin-job-postings-plunge-may-by-far-the-worst-month-since-january-2009/
The US is doing very well as to the unemployment situation and it is holding right around 32% as fully measured and not rising by much at all as the months of Fiscal 2016 progress.
Credit card debt in U.S. will hit $1 trillion by year end, higher than peak of ’08.
http://www.washingtonexaminer.com/report-deadbeat-america-drowning-in-credit-card-debt/article/2593382
So what? $1 trillion is a very small amount of consumer debt, although it carries extremely high interest rates in the 12% to 25% and higher per annum range and is foolish for anyone to carry at all. It is a trivial little portion of the total debt outstanding in the US.
Total DEBT outstanding in the US and the actual figure is now somewhere between $60 and $64 trillion at this stage.
Very little of the total $60+ trillion outstanding debt in the US has anything to do with the Federal Reserve or regulated banking system in the US which only has about $12 trillion of funds for all of the 7,000 member banks.
Much of that DEBT outstanding has to do with MONEY BORROWED IN THE BOND MARKETS THROUGH THE ISSUANCE OF SECURITIES which has nothing whatsoever to do with the Federal Reserve and is totally outside the scope of regulation of the Federal Reserve and is regulated by the SEC (Securities and Exchange Commission).
Within the $12 trillion regulated banking system the outstanding loans to customer deposits ratio is a record low 67%.
There is around $25 trillion sloshing around in the SHADOW BANKING SYSTEM which is nearly 6 times as much as the balance sheet of the Federal Reserve and double the amount of the US M2 money supply.
The breakdown of the $60 or so trillion of DEBT outstanding is approximately as follows by big picture category:
30% Federal Government Debt
20% Total Consumer Debt
23% Total Corporate Debt
27% Other debt including Municipalities
The federal government debt is presently around $19.2 trillion, Total consumer debt is around $12 trillion which includes about $1 trillion in consumer unsecured credit, $1 trillion in vehicle loans, $1.36 trillion in student loans, and about $8.64 trillion in real estate loans secured by mortgages. The total corporate debt is around $14 trillion with a large percentage of that outstanding on corporate bonds which now have average interest rates of around 8.83%. The balance is a mix of all other types of debt outstanding with the largest portion of that $16 trillion being municipal bonds issued by state and local authorities and agencies.
Again, very little of the $60+ trillion in DEBT outstanding has anything to do with the regulated banking system and the Federal Reserve and the banks and Federal Reserve certainly are NOT CREATING much of that at all.
If the recession is back dated to March this will make the 10th time in a row the USA has fallen into recession within 2 years of solar maximum. All the way back to 1900 the USA had one recession on the upside of a solar cycle. At the end of hostilities for WW2. The sun peaked in April 2014
That sounds like a Suspicious 0bserver’s slanted comment, Joe. 🙂 I can understand what you’re getting at with that comment.
Also, I stand by my comment from previous discussions of Recession/Depression start time frame about November-December 2015. I know what charts and polls show, but boots on the ground experience showed me it started a bit sooner than most believe.
No it is pretty solid I have ran the numbers myself. Prior to massive manipulation of the stock market, stocks followed the 10.7cm solar magnetic flux pretty close, but with about a 1 year lag. Long weak cycles produce manias and crashes. Strong short cycles usually do not. Solar cycle 23 and 24 were long weak cycles. Look when the tallest buildings in the world are built almost exclusively in long weak cycles. It takes time to design and fund such a project and short solar cycles don’t give time for mania to set in. SC24 peaked in 4/14 look at all the charts of trade and manufacturing around the world. Hell look at these and compare them to the solar flux of the last 2 cycles.
The GRAND GLOBAL DEPRESSION started in August 2007 and has been intensifying ever since and is now more rapidly intensifying as the world drowns in a sea of global debt in excess of $200 trillion. There may be some signs of slight improvement in the period from 2032 to 2040, but I wouldn’t place any bets on that at this stage.
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“Many things are outright screaming recession.
I expect huge revisions on numerous fronts. And I am not the only one.”
Absolutely
And ANYONE saying “no recession now” just proves how CLUELESS they are.
We may or may not be in a recession now, but no way of knowing for sure till later … once the revisions are taken into account.
“US Tax Receipts Signaling Recession?”
I would think so. There are so many charts which look recessionary in nature, even if the current “official” GDP is positive.
Two sporting goods chains just went bankrupt in short order. Dicks Sporting Goods hit a high of around 60 in April, 2015. It has dropped as low as about 34, currently around 42. People don’t have money to spend on extra curricular activities, like they used to.
That simply is not true here in Beverly Hills, California or in the Hamptons.
Lol! Are you actually saying that with a straight face?!
Adam also believes that Trump WILL make America great again.
Very amusing!
I think it is different this time. My household and most people I know have now switched to shopping almost 100% over the internet for just about everything but food. Even buying locally it’s buying off Craigslist, Goodwill, garage sales, etc. That almost completely eliminates paying sales taxes, which are quite high where I live. This has all come about in the last year or so. Most people are now quite comfortable shopping in alternative venues than traditional brick and mortar.
With sales taxes and “user” fees constantly escalating and incomes stagnating, people have no choice but to cut costs where they can. Look at your phone bill or cable bill sometime. The base rate rarely changes but every few months your bill goes up due to increased tax rate or another fee added or increased.
Why different this time?
Not disputing your alternative to what is going … but the result is still the same “officially*”
*not just the tax issue, but any business in the PCE arena will take a hit … leading to layoffs, cutting inventory, going out of business, etc.
Leading to recession
Online shopping is eliminating jobs. If this results in loss of sales taxes, government WILL respond and many companies like Amazon do charge sales taxes and most others do as well if you buy in-state. All indicators are pointed downward when it comes to employment, and employment of the private sector is what floats our boat. Sure, tax revenues are down, which regardless of what is causing it, WILL cause them to seek it in other ways which will only depress the economy more. Find me a tax…any tax, that stimulates the economy…positively.They have been raising taxes since Obama came to office and it resulted in record revenues….for a short while.
Look at the money saved by feeding your livestock sawdust….in the short run, and then tell me of your profits in the end.
You only live once and it is a far nicer and better experience to shop on Rodeo Drive in Beverly Hills, Palm Desert, and in Paris, France and I really would suggest you get out more often and do some quality shopping.
Sales taxes are very good and necessary for healthy state economies and here in California we have a 9% sales tax. Every time someone buys a brand new BMW Rolls-Royce the State of California gets to enjoy $30,000 to $50,000 or more in sales tax revenues from just that one transaction which is wonderful for the overall California economy.
“Many things are outright screaming recession.”
Shades of one Lakshman Achuthan.
At times like this, with recession “signals” drowning out bullish noise, I always like to consult stockpickr.com founder James Altucher.
I’m just saying.
Moreover, recessions don’t scream.
They sneak up on you and are rarely even acknowledged until six months after their arrival. They usually come in on a wave of revised data and the dreaded “trailing indicators”.
If there was any credible real screaming, the damn things might be avoidable.
Which leads me to believe that this is not an accident or the nature of economics. We see repeatedly economists and politicians TELLING us that even mentioning recession creates one. We are to fear calling the devils name out loud for fear he will come running our way. It is a conundrum of madness that is integral to the mysticism of gambling. It is a complete admission of departure from reality, where we are more reliant on emotions and animal spirits than science or even math. We have seen the infinite mechanizations created to sell that which does not exist, derivatives and so many financial instruments that exist solely for the purpose of placing a bet. And they tell us of how important, how fundamental this all is to our economy…to our EXISTENCE, that we will perish in their absence.
The recession in 2007 was totally obvious. Screaming as loud as possible. People simply did not want to believe the warnings.
Someone emailed me a pdf of this about 6 months or so before Lehman — it was a holy %$#^ moment.
https://www.youtube.com/watch?v=tJH2CcpXztE
Of course most people get their ‘news’ from the MSM which will always tell them that things are wonderful.
Imagine if in 2007 sites like this , Wolfstreet Zerohedge and Finite World had existed
Salesmen are a dangerous source of information. I would contend that all things equal, a stockbroker or anyone who makes their living from the stock market is going to be inclined to suggest much more buying than selling, and if they do recommend selling, it is simply to fund purchases elsewhere.
Fishmongers do not spend a lot of time warning their customers of the risk of swallowing bones.
He just compiles the data. And his interpretation was there was little danger of recession before.
Altucher?
He’s the left side of my “idiot barbell” … zandi resides on the right side
Ha, Ha! That’s a good one. ;D
Zigging when others zag is often the basis of excellent stock picking. Those who are zigging may well get viewed as idiots, but I would submit they are often rather wealthy idiots.
We saw similar dips in 2012 according to your charts and if I remember correctly, wasn’t that also one of our many “summers of recovery”?
If patterns mean anything, it sure looks like another drop is coming, but as we know, since 2008, nothing is normal anymore. The real question is….what will be the governments of the world response? You can bet there are a lot of market gamblers betting that there will be a response and they are lining up on the shore to see what the storm tide washes up. Our economy is nothing BUT distortions and unintended consequences. It is destabilized and most definitely volatile, but no one knows for sure how it will play out. The fact that fundamentals are so wrecked that people are seeking the “safety” of the stock market, tells us how mad it has all gone. After thousands of years of studying economics and human behavior, the only thing we know for certain that it will end, and not well.
2012
If you recall, higher federal taxes kicked in January 1st, 2013. A lot of income brought forward – in some cases YEARS in the form of capital gain & special dividends – to beat the increase.
I spent quite a bit of effort a few years ago to determine how much … best I could tell was $250 billion to $400 billion brought forward to 2012.
Stick save to chart above.
From the chart it could be similar to the drop in summer 2014. Could this be a secular trend or is it cyclical after the last recovery. We appear to live in an alternate universe since 2009. The numbers will be manufactured to make sure the globalist agenda puts Hillary in office. TPTB want no outsider in control. Is there anyone that believes that they won’t do everything to prevent the perception of a recession no matter what is happening on main street ? Has the economic divide between Washington and main street ever been wider ?
“TPTB want no outsider in control. ”
I have to wonder if democrat party voters would bother to vote in the primary if they knew that their vote does not matter; the elites and insiders picked the candidate before the primary even began:
https://theintercept.com/2016/06/07/perfect-end-to-democratic-primary-anonymous-super-delegates-declare-winner-through-media/
“TPTB want no outsider in control.”
The Donald was defeated in home borough of Manhatten while sweeping up the rest of the NY primary. The banker crowd wants no one who may be a disruptor.
Hellery is about to be CRIMINALLY INDICTED after which she won’t get the nomination and won’t even be running in the general election in November.
DONALD TRUMP FOR PRESIDENT 2016.
For a while the National Debt was in the news; now it seems to be ignored even though it just keeps on climbing. Currently it is over $19-1/4 trillion and will be around $20 trillion when Obummer leaves office. That will be just about double what it was in 2008, the year before he was elected. Since the repubs have given up on controlling spending, neither party wants to make the debt an issue. Only those annoying libertarian/smaller government types keep bringing it up.
http://www.usdebtclock.org/
Yep, and the federal debt is up by more than $1 trillion this year in Fiscal 2016 which start on October 1, 2015 which I detailed below.
Oh no, the wholesale trade report is an upside blowout! Although I’m sure it’s not as good as it appears, there’s a chance it will raise 2Q GDP estimates.
“Upside blowout” is a curious way to describe a report that indicates slowing economic conditions.
If you think this chart looks healthy … have at it.
https://research.stlouisfed.org/fred2/series/R42IRSM163SCEN
Mish, those numbers you cite are based on a very dodgy SURVEY and are likely far from correct. What are the actual numbers as to federal tax receipts at the US Treasury? Are those numbers published?
Other reports TOTALLY CONTRADICT these assertions that federal tax revenues are falling and indicate that they are running at RECORD HIGH LEVELS IN FISCAL 2016, such as:
Government Collects Record-High Taxes in First Half of FY 2016
The Washington Free Beacon
Apr 12, 2016 – Federal tax revenues hit a record $1.48 trillion for the first half of fiscal year 2016, but the federal government still ran a $461 billion deficit.
http://freebeacon.com/issues/1-48-trillion-government-collects-record-high-taxes-first-half-fy-2016/
Labour participation just hit a record low.
Corporate profits are down 3 consecutive quarters.
Where do you reckon this windfall of tax revenues has come from?
Do you work for Obama? Or do you actually believe government spin?
And the unemployment rate is 4.7% har har har
JC Juncker: ‘When it gets bad enough – you have to lie’
It must be really, really, really bad. The lies are becoming epic.
But then didn’t someone also say ‘If you repeat the lie enough times – not matter how ridiculous it is — the people will believe it’
Cognitive dissonance is a powerful thing — even intelligent people – when faced with facts that point to an extreme threat to their survival (collapse of the economic system certainly qualifies) will believe anything that pushes that thought into a box in the corner.
Funny story. A shareholder in a company I own weighed in around the time of the Lehman disaster – he’s a smart guy – set up the bond division of a major bank years ago.
His comment was ‘if a major country defaults it’s… (he paused)…. Mad Max…. But of course they will throw everything at this to prevent that’
Fast forward to 2016 and I pointed out the madness that surrounds us – including the gargantuan buy backs — the trillion+ stimulus out of china Q1 — I suggested this was the kitchen sink being thrown at the 08 problem — and it’s not working…
Response ‘Well remember that in 1998 the HK government bought up the market preventing a collapse — so don’t lose hope’
Like I said — when faced with the end of days — even the smartest people can embrace the most absurd notions.
There is a reason why the world hopium exists.
Oh – and huge numbers of smart people also believe that when they die they have a shot at everlasting life offered by a guy in they sky.
The federal government’s fiscal problems are on the SPENDING SIDE and not on the revenue side of the books:
The US federal government has no conception of EVER BREAKING EVEN let alone having any money left over after its spending (profit). The US government is the BIGGEST MONEY LOSING BUSINESS IN THE WORLD and needs to be run much more like an actual business instead of a HUGE LOSS FEST.
In 6 Months Since Budget Deal: Debt Up More Than $1 Trillion
At the close business on Oct. 30, 2015, the total federal debt was $18,152,981,685,747.52. By the close of business on April 28, 2016—the latest date for which the Treasury has published the number–the total federal debt was $19,186,207,744,589.55.
That is an increase of $1,033,226,058,842.03.
On Monday, Nov. 2–the day Obama signed the Bipartisan Budget Act and thus suspended the debt limit–the debt took a big leap. It closed that day at $18,492,091,120,833.99—up $339,109,435,086.47 from its $18,152,981,685,747.52 closing on Friday, Oct. 30.
Prior to that, the part of the federal debt subject to the then-legal limit of $18,113,000,080,959.35 had been frozen just below that limit for more than seven months (from March 13, 2015 through Oct. 30, 2015), during a “debt issuance suspension period” that Treasury Secretary Jacob Lew had declared on March 13, 2015, to push back the date at which the debt limit would be exceeded.
According to the official summary of the law, Section 901 of the “Bipartisan Budget Act,” which Congress passed on Oct. 30 and Obama signed Nov. 2, provided that the “public debt limit is suspended through March 15, 2017.”
The $1,033,226,058,842.03 increase in the debt in the six months since then equals approximately $6,828 for each of the 151,320,000 persons whom the Bureau of Labor Statistics estimated had a full or part-time job in the United States as of this March.
http://cnsnews.com/news/article/terence-p-jeffrey/6-months-budget-deal-debt-more-1-trillion
Just think about how bad US GDP would be now if not for the vast increases in medical expense spending thanks to ObamaScare and the huge premium increases now in place for up to 50% for 2017 will really help the US GDP have some nice zing to it!
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