Weekly Indicators: Payroll Tax Withholding Falls Off A Cliff Edition

Tax Withholding

  • $104.5 B for the first 11 days of February 2018 vs. $111.8 B one year ago, down -$7.3 B or -6.5%
  • $184.0 B for the last 20 reporting days vs. $196.1 B one year ago, down -$12.1 B or -6.2%

With the exception of the month of August and late November, this was positive for almost all of 2017. In the last several weeks, however, this metric has all but fallen off a cliff. I am at a loss as to why, as payroll withholding taxes should not have been affected by the recent tax cut.

Oil prices and usage 

  • Oil up +$2.59 to $61.64 w/w,  up +15.4% YoY 
  • Gas prices down -0.03 to $2.61 w/w, up $0.30 YoY 
  • Usage 4 week average up +6.5 YoY 

 The price of gas bottomed 2 years ago at $1.69.  With the exception of July, prices generally went sideways with a slight increasing trend in 2017.  Usage turned negative in the first half of 2017, but has almost always been positive since then.

 Bank lending rates

 Both TED and LIBOR rose in 2016 to the point where both were usually negatives, with lots of fluctuation.  Of importance is that TED was above 0.50 before both the 2001 and 2008 recessions.  The TED spread was generally increasingly positive in 2017, while LIBOR was increasingly negative.

Consumer spending

  • Johnson Redbook up +2.8 YoY
  • Goldman Sachs Retail Economist +1.8% w/w, +1.5% YoY

 Both the Goldman Sachs and Johnson Redbook Indexes generally improved from weak to moderate or strong positives during 2017. Goldman Sachs was a little soft this week.

Transport

Railroad transport

  • Carloads down -0.5% YoY
  • Intermodal units up +3.7% YoY
  • Total loads up +1.6% YoY

Shipping transport

Rail has been generally positive since November 2016 and remained so during all of 2017 with the exception of a period during autumn when it was mixed, and at the beginning of this year, when it was negative for a few weeks. It was positive two weeks ago, but mixed again since then.

Harpex made multi-year lows in early 2017, then improved, declined again, and then improved  yet again to recent highs. BDI traced a similar trajectory, and made 3 year highs near the end of 2017. I am wary of reading too much into price indexes like this, since they are heavily influenced by supply (as in, a huge overbuilding of ships in the last decade) as well as demand.

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This post is not an offer to buy or sell this security. It is also not specific investment advice for a recommendation for any specific person.

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Harry Goldstein 10 months ago Member's comment

Good stuff, anything more current by you?