Consider Your Sources

Wednesday, April 1, 2009

When the Government releases economic data, I usually yawn. They game the numbers to their advantage, you have to when unfunded liabilities like Social Security require phony numbers to remain solvent. A really easy way to measure employment on a national scale would be to measure how much people are paying in taxes. The government doesn't do this. They have this far fetched formula that they use and manipulate to their advantage. One company though does look at tax receipts and here is a recent report of theirs...

TrimTabs is out with their most recent employment data, which compares to the earlier ADP report, that the market forgot about after the first 30 minutes of trading. According to TrimTabs "the U.S. economy lost 700,000 to 750,000 jobs in March as wages and salaries plunged 4.5% year-over-year. TrimTabs estimated that the economy shed 4.3 million jobs in the past 12 months, the largest annual job loss since 1970."

"Job losses have been accelerating in recent months," said Charles Biderman, CEO of TrimTabs. "Investors who think the economy is bottoming out are going to get quite a shock this spring." TrimTabs uses daily income tax withholdings into the U.S. Treasury to estimate changes in employment. According to TrimTabs, the country lost 2.1 million jobs in the past three months and 3.4 million jobs in the past six months.

Much more interestingly, TrimTabs estimates that Joe Schmoe's conviction that the market has bottomed is translating into returns to good ole spending behavior and savings rates are in fact lower than reported, meaning the as savings rates inevitably run up, the pain for the economy will just get so much worse.

TrimTabs reported that the personal savings rate in February was much lower than the 4.2% reported by the Bureau of Economic Analysis. "Real-time income tax data indicates that personal income is plummeting and that the savings rate was no more than 0.9% in February," said Biderman. "The only reason the savings rate was positive was that income tax refunds were up sharply relative to last year."

And to add to the gloom and doom, TrimTabs concludes: "The key macroeconomic and liquidity indicators TrimTabs tracks show no sign of a bottom for the economy. The economy is still contracting a lot more rapidly than the government is reporting."

Hooray for the good news....the market is up almost 2%

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