There has been some recent talk about “green shoots” of a possible recovery appearing. The contraction of the economy is estimated at about 2.6% negative. That doesn’t sound all that bad. On the other hand, tax receipts are crashing with a 25% decline compared to last year.
July 2009 will probably come in at 90% or worse compared to July 2008, because July 2008 had over $13 billion in stimulus payments, which Uncle Sam (erroneously, in my opinion) treated as negative receipts instead of outlays. August 2009, vs. August 2008 will be worse than July, because August 2008 stimulus payments were barely $1 billion. September 2009 vs. will probably be even worse than the previous two months, because that month is heavily influenced by corporate income and non-withheld tax receipts, which as you can see above have fallen far more than the overall average. Also note that August and September of 2009 will show year-over-year declines for the second straight year. Monthly year-over-year receipts from economic activity increased for an almost unbroken string of four years up until August of last year, when the recession as normal people define it began.
The facts of these shocking drops in revenue are not being reported even though the Democrats are planning a spending binge that is using estimates of revenue that are out of date.
This is going to get ugly.
Tags: economy, tax receipts