In my never-ending quest to bring information on the economy to my readers, I must confess that much of it relates to my own attempt to expand my understanding. One thing I have been looking at, although good and timely data is hard to find, is tax receipts for payroll taxes like Social Security and income taxes. Falls in the number of people paying payroll taxes would likely indicate a decline in employment and declines in income tax receipts suggest slowing economic activity. And in fact it appears that the rate of government tax receipts is decreasing, although many factors can be at work here. Slowing tax revenues is one reason the deficit is far larger than expected. (ZH Post)
There are other signs to watch for a recession; several are listed in this linked post. I don’t buy all of them, but important ones noted are the fall in real household incomes, meaning adjusted for inflation; the large increase in credit card debt and the simultaneous rise of credit card interest rates to record levels, both of which suggest a lessened future ability to spend; and in fact failure to pay credit card bills is rising as well, also suggesing consumer stress; and finally, more people are taking emergency withdrawals from 401k plans. Most of the data indicates to me that consumer spending and retail sales are likely to take a hit soon. (ZH Post)
