The amount of withheld taxes received by the Department of the Treasury for the last 12 months through May 2008 was 2.27% higher than a year ago after being adjusted for inflation. 12 month's withheld taxes ending in May 2008 is now off 0.63% from the peak reached in December 2007.
While withheld taxes are declining slightly, they have not reached the magnitude that occurred during the 2001 recession when withheld taxes declined over 5% year over year. Withheld taxes gives us a real time peak at what is happening to income. It is consistent with the recent spate of economic data suggesting that we are flirting with recession but are not feeling the effects of a full-blown recession.
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