How's the Economy Doing? Treasury Receipts Down 15%

by: Sudden Debt

How's the economy doing? There is a huge raft of statistical data to choose from, but how about this one: U.S. Treasury receipts from all sources. It stands to reason that they are a pretty good indicator of overall economic activity since they include income and corporate taxes, customs and excise duties, etc.

The chart below shows a 12-month running total (blue line) and the percent change from the year before (red line); they are down 15% for the period ended in August 2009. That's not to say that nominal GDP is down 15% - don't forget the increase in government spending (which piles on even more debt, of course) and the artificial boost to numbers from the shrinking trade deficit. But what this chart is ultimately saying is that, when it comes to the private side of the economy, then yes, it is more or less down 15% from a year ago.

Data: US Treasury

12 Month Treasury Receipts down 15%

Another interesting observation has to do with the 2001-02 recession: as this chart indicates, it was not exactly mild. Treasury receipts went down around 13% because of the dotcom bust and 9/11, prompting Mr. Greenspan to respond with the disastrous monetary policy which eventually produced the massive credit and real estate bubbles.

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