Weakness Unmatched in 35 Years....or maybe ever

[RedEarth]

By John Mauldin - February 17th, 2009, 8:15AM

One of the best gauges of an economy is tax collections. No one pays taxes unless they have to, so collections are a real-world, real-time analysis of the US economy. And the best source I know of for tracking taxes is The Liscio Report, by Philippa Dunne & Doug Henwood.

Tax collections are down. Philippa and Doug give us the actual numbers, which are not pretty. Bottom line? “What does this all mean? It suggests that the consumer retrenchment in this recession will be deep and long, and will probably continue into any recovery. The American consumer is no longer the world consumer of last resort, and that’s an enormous change for both this country and the rest of the world to get used to.”

The Liscio Report On the Economy

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Consumption: From Excess to Freefall
What’s happened to consumption since the middle of 2008 is nothing short of stunning, both in speed and magnitude. Several examples will make this point.

Let’s start with one of the mainstays of this report, sales taxes. Graphed below is the yearly change in state and local government (SLG) sales tax receipts adjusted for inflation from the national income accounts. (The price index is that for SLG purchases.)



more...

http://www.ritholtz.com/blog/2009/02/weakness-unmatched-in-35-years/

[DrDan]

1. so will this trigger more emphasis on taxing internet purchases?

[ConcernedCanuk]

2. And didn't Kansas just stop paying Income Tax refunds?

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Like that's money TAKEN from the workers that they don't really owe

Most wage-earners overpay taxes by the payroll deduction scheme - and many EXPECT that refund

some use it to pay off credit cards, an vacation slush fund - in my case - it's my vehicle insurance . . .

Many will be looking for CASH jobs to avoid the tax man - we already have that underground economy,

but it's gonna INCREASE

and the gov'ts are gonna end up with less tax income in the long run

this is a lose-lose situation . .

(sigh)

[TomClash]

3. Doug Henwood - wow

I have fond memories of The Left Business Observer from my grad student days.

He should look at the collapse of the PIT in NYC. It's huge.