Worse Still, So Far in the Month of May, Net Take-Home Pay Is Plummeting A Staggering 16.3% Percentage Points Y-o-Y
SAUSALITO, Calif., May 29 /PRNewswire/ — TrimTabs Investment Research today reports that on Monday, June 1, the Bureau of Economic Analysis (BEA) will likely revise its estimates of wages and salaries and the personal savings rate substantially downward for the last quarter of 2008 and the first quarter of 2009 when it incorporates actual wage and salary data from the state-collected Q4 2008 Quarterly Census of Employment and Wages (QCEW). The QCEW data will show that wages and salaries were much lower in Q4 2008 and Q1 2009 than the preliminary BEA estimates.
“Bernanke’s ‘green shoots’ are about to get weed whacked big time, when the BEA revises its wages and salaries estimates downward by as much as three-to-four percentage points for the six months prior to March 31, 2009,” said Charles Biderman, CEO of TrimTabs. “The BEA will confirm what we have known for months, the economy is in much worse shape than preliminary estimates indicated.”
TrimTabs uses daily income tax withholdings flowing into the U.S. Treasury to estimate changes in wages and salaries. According to this data, wages and salaries fell 1.4 percentage points year-over-year in Q4 2008 and plunged 5.3 percentage points y-o-y in Q1 2009. In contrast, the BEA, in its initial estimates, used income data from the QCEW report for Q3 2008; it then reported that wages and salaries grew 1.0 percentage point y-o-y in Q4 2008 and declined by only 1.0 percentage point y-o-y in Q1 2009.
“By relying on Q3 2008 income data, the BEA missed the huge turning point in the economy in Q4 2008 as a result of the Lehman Bros. collapse,” said Biderman. “The downward surprise on Monday resulting from the BEA revisions is likely to hit the equities market hard,” he added.
Worse still, the income picture darkened in May. TrimTabs real-time data indicates that net take-home pay, which is defined as after-tax wages and salaries plus income tax refunds plus government tax credits and tax rebates, is down a staggering 16.3 percentage points y-o-y so far in May, compared to a decline of 4.3 percentage points y-o-y in the period of February through April 2009.
“Real-time data leaves little doubt the economy continues to contract at a rapid clip,” said Biderman. “Widespread expectations that the economy will recover in late 2009 are going to be dashed.”
TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity–including mutual fund flows and exchange-traded fund flows–as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. For more information, please visit www.TrimTabs.com.
