key data on the broad economy’s performance a month in advance. The
payroll tax and benefits numbers for May came out last Friday. This
information represents about 150mm workers. So it is even broader than
Non Farms payroll (“NFP”) numbers.
These numbers will be revised. There is tricky seasonality. Some months
are five weeks, others four. Holidays come into play, especially when
they are over a month end. There are also quarterly adjustments. These
represent reversals of prior year reported results. (In 2010 there was a
downward restatement of prior year revenue of $26b).
Knowing all this I still look at the numbers in the belief they provide
valid information on the broader economy and (hopefully) a decent look
at the Non-Farms data due out at the end of the week. For what it is
worth; my read of the numbers is that the NFP will disappoint and the economy is stalled.
I think of the May data as a baseline for April. If that were to be the
case it would give a window to the April NFP. The YoY tax increase is
$542mm. Approximately 1.5mm jobs. This would suggest (to me) that the
April NFP number is a range of 0 -200,000. So I am all under the Street estimate of +200,000.
The
year to date through May is nothing to write home about either. This
looks at the past few years. Yes, tax revenues are up from a year ago,
but they are also at 2007 levels. I estimate that the average wage for
those who found work in the past five months is less than $30,000.
It’s hard to get excited about this picture. I took a lot of flack
recently with the comment that the difference between 2009 and 2011 is
that in 2009 there were no “jobs” and there was no “work”. In 2011 there are still no few “jobs” but there is “work.” To some extent the improvement we are seeing is a function of people who can’t find a “job” (teaching) who have been forced to “work” (flipping burgers). So really there is not much improvement at all.
Social Security is continuing to run red ink on the critical ratio of
payroll tax revenue to benefits paid. This looks at the first five
months over the past few years. Benefits march higher while revenues are flat:
A closer look at the difference between the primary income and expense.
The red ink for the five months in 11’ is the first since 1983. Not long
ago SS was a cash cow that funded a portion of the federal deficit. Not any longer.
Note:
Recently I made note of the benefits paid at SS exceeding $60 billion in a month. I used this slide:
The bean counters at SS revised that number. It’s still above $60b but $130mm lower than the first estimate:
This is no big deal. It is a 1/8th percent adjustment. Literally, a rounding error. But it struck me funny. How could $131mm be a rounding error? In a month? The answer of course is that the amounts involved are so very large. The Social Security payout is running at $1.4mm every minute. That comes to $23 thousand every second. And that’s 24/7. And rising.
1 in 7 people in US on food stamps. The subprime student loans of several hundred billion per year is also a form of entitlement and food stamps. Deficit spending is about 80% of tax collections and US still can't create jobs!! If deficit spending cut then there will be a depression and the Congress will NEVER, NEVER allow that. Deficit spending will accelerate quickly this year. Can you image the student riots if financial aid was cut??
I'm imaging the ex-student riots when they discover they can't escape the debt incurred for an over-priced piece of paper (assuming they even made it that far).
Even if they can get a non-college level job, this debt will ensure they remain living paycheck to paycheck for the rest of their lives. Some will go their whole lives without owning anything more than an old car.
The Education Bubble may end up putting the Housing Bubble to shame.
great post... and of course, the benefit limit will be exempt from COLA, but will be taxed higher and higher.
Said this before. Instead of "cutting" either one, the retired get one and one only. SS or Medicare. If you have savings, you'll chose Medicare, if you don't you collect SS and call the soylent green truck when you can't feed yourself anymore.