The question of the day: Did president Obama tax the US into recession?
Welcome to the new recession. TrimTabs tracking of real-time wages and salaries shows that the United States has entered into a recession this year. I had been predicting a slowdown after the big bump in December incomes due to the hike in taxes. It has taken a while for us to get a handle on income this year given all the changes in tax rates. But now enough time has passed that I can say I was right. The U.S. economy has slowed enough to enter into recession.
This is how I know we have entered into a recession. After-tax wages and salaries net of inflation have been shrinking year over year since the second week in January. What has been growing dramatically in real time this year is income and employment tax payments.
Withheld income and employment taxes have been running about 8.3% higher year over year, comparing the same 33 business days between Tuesday, January 8 and Monday, February 25.
Checking with our favorite official Washington economist, we now know that higher employment taxes accounted for 6% and new soak-the-rich taxes 2% of that 8.3% gain. That means that, before inflation, after-tax wages and salaries grew by only 0.3% for the 135 million Americans that have jobs subject to withholding.
After inflation? Well, what is inflation now? If you believe the Fed, around 2%. Others say higher. Regardless, there is no doubt that the Obama Administration has taxed us into a recession. Congratulations. Inquiring minds may wish to read the rest of Biderman’s article for some interesting thoughts on insider selling, stock buybacks, and Trim Tabs‘ employment projections vs. BLS reporting.
When Did the Recession Start?
Biderman claims the recession started in 2013. I suggest the US has been in recession since last June or July but the recession was masked over by four identifiable factors.
Obamacare was responsible for huge hiring of part-timers in the third and fourth quarter, distorting unemployment statistics.
Tax policy and Obamacare policy further shifted expenses and salaries into 4th quarter, yet nominal GDP was still negative for the quarter.
Electioneering games, particularly in regards to military spending, distorted the third quarter statistics.
Blatantly dishonest GDP deflators have overstated Real GDP for all of 2012 but especially the second half of the year.
Let’s assume I am wrong about recession timing, and Biderman is correct. The initial question remains.
Is Obama to Blame?…………………