FED CHAIR POWELL SAYS THE US ECONOMY IS STRENGTHENING. LET’S PUT HIM TO THE TEST.

To elaborate on the employee withholding taxes used in the article which are a good guide to employment trends. All things being equal, a rise in withholding taxes paid on behalf of employees is associated with a rise in employment and a fall in withholding taxes with a fall in employment. The Federal Budget Year runs from October to September. Table 2 in the CBO Report provides cumulative data for receipts and expenditures. Thus my February figure takes the cumulative data for withholding taxes and divides it by 5 months to obtain the moving average while my June figure divides it by 9 months.  Accordingly, it shows the moving average is in significant decline, which given the inflation in wages and therefore withholding taxes, does not correspond to the rise in payroll employment as reported by the BLS. Finally, with total Federal Receipts on all income down by over 5% in real terms in June, the economy is clearly in recession because taxes don’t lie (excluding for the super-rich who don’t pay taxes anyway, so need not be included).