Federal Reserve and Monetary Policy: Statistics, those Dam Statistics

Somebody from TrimTabs was on CNBC's Closing Bell (April 1, 2005) and stated that he feels that the US economy is very strong. He cited the income tax collection and related it to strong incomes. Here is the link: Individual Tax Statistics - Filing Season Statistics / Taxpayer Usage Study
I'm not going to comment on this data because it is not complete. You can make up your own mind.

However, I'm going to comment on the Bureau of Economic Analysis' Personal Income numbers. I'm going to compare BEA's 2003 personal income from table 1B.
See link: GDP REVISED ESTIMATES: 2001 THROUGH FIRST QUARTER 2004
and
Adjusted Gross Income from IRS Issues Winter 2004-2005 Statistics of Income Bulletin

From IRS;
The Bulletin includes an article on preliminary data from individual income tax returns for 2003. Taxpayers filed 130.6 million U.S. individual income tax returns for 2003. Adjusted Gross Income (AGI) reported on Tax Year 2003 returns totaled $6.2 trillion for 2003, while taxable income was $4.2 trillion and total income tax was $750 billion. The largest component of AGI was salaries and wages, totaling nearly $4.7 trillion. A total of $261.4 billion in business net income was reported on 14.4 million returns.

From GDP table 1B;
Person Income Section - Wage and Salary disbursement: $5,103.6 billion

5103.6 – 4700.0 = $403.6 billion

This just shows that the Bureau of Labor Statistics wage number has a large error.

The link for historical IRS data: Articles and Data Releases

Wages and Salary Data

Year	From BEA	From IRS	Difference
2002	$4966.3	$4611.4	$354.9
2001	$4942.8	$4600.0	$342.8
2000	$4836.3	$4456.2	$380.1
1999	$4470.4	$4132.5	$337.9

As you can see, BEA's estimates are high, in recent history.

BLS release the March 2005 Employment Situation Report. The establishment number was a disappointing 110,00. Egad!! average weekly earnings increased by 0.3%. This was the number Wall Street was focused on. This increase really stroked the inflation fears. We now know that it has no real meaning.

The number that I focus on is the number unemployed by duration. The over 27 weeks number is an indication of whether the Net Birth/Death model will be a good number. See Table A-9
That number has increased. So has the mean duration in weeks and the percent distribution for over 27 weeks. This is an indication, to me, that the Net Birth/Death model well not be representative of the actual job market. See post for details.