Thursday, May 6, 2010

Making Sense of the Economic Data

Headlines to Consider:
Murray, S. (2010, May 4). Manufacturing shows broad signs of growth. The Wall Street Journal, p. A8.
Manufacturing activity increases as index for new orders rose. However, construction spending is still 12.3% lower than the same time last year (a time in which construction was very low).

California Budget Crisis Expected to Linger. May 5 2010.
"LOS ANGELES, May 4 (Xinhua) -- Revenue collections in California plunged in April, dashing hopes of an easy budget fix, it was reported on Tuesday. Revenue for April lagged projections by nearly 30 percent, or roughly three billion dollars, according to the Los Angeles Times."

Federal Income Tax Collections Foretell More Bad News for States
Rockefeller Institute fiscal policy experts see troubling indicator in federal data through end of April
"Albany, N.Y. — A decline in personal income tax revenues collected by the federal government through the end of April 2010 suggests that state governments may suffer significant declines in such tax collections compared to 2009, a period which itself was down dramatically from the year before, according to Rockefeller Institute fiscal experts. . . .Through April 30, the federal government’s nonwithheld income taxes are down 17.6 percent from a year earlier. That is likely a close estimate to the final decline the Internal Revenue Service will see in nonwithheld income tax collections in this period; in 2009, 96 percent of April and May's nonwithheld taxes were known by April 30.

HOW TO MAKE SENSE OF THESE DATA POINTS? MANUFACTURING INCREASES AND THAT IS GOOD BUT MANUFACTURING IS BUT A SMALL CONTRIBUTION TO NATIONAL GDP TODAY. The Service Sector must still be contracting. Public sector employees are getting hit hard again with layoffs and furloughs...

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