Downturn Moderating? More LIES!
I usually don't repost full Denninger posts, but this one is too good to be ignored... I quote his post in full: (if you're looking for another good read--check out this Mish post)
I'm getting VERY TIRED of the misleading presentation in the media:
June 10 (Bloomberg) -- The Federal Reserve said the U.S. downturn may be slowing in almost half of its regions, with the outlook at some companies improving while “stringent” loan conditions and a “weak” labor market persist.
Yes, but what was the headline?
Fed Says Downturn May Be Moderating Amid Weakness
No they didn't.
5 out of 12 is less half of the districts that reported a slower deterioration, while the majority reported either faster or equivalent deterioration.
There is no evidence presented that the downturn "may be moderating."
In fact, the high-frequency data says that things are getting much worse in places like California. What high-frequency data? Try this:
The state's revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang's office.
The bold part is the important one.
See, sales taxes are (1) almost never gamed as there is little point, (2) they're paid by consumers but collected by businesses who have little incentive to cheat, (3) the penalties for cheating are draconian and the audits frequent, and (4) they apply to nearly all goods (except food in some states.)
Therefore, if sales tax revenue is down 7.9%, you can reasonably presume that economic activity at the consumer level is down somewhere around 7.9%.
Since the consumer is 70% of the economy, it is not hard to figure out that we are approaching the 10% "top-to-bottom" decline level that defines economic depression.
Second, look at income tax receipts. Down 40% for individuals and half for businesses. Businesses only pay taxes on profits, while individuals only pay taxes on incomes. Since individual taxes are typically progressive, this points to a roughly 30% aggregate decline in personal income (!) and a nearly-half cut in corporate profits (!!!)
While California is not the entire country, of course, it is the largest economic block in the nation, and those numbers are frightening.
This sort of "reporting" is absolutely outrageous and irresponsible, and it is high time that the people demand that the media start telling the truth instead of planting false hopes and playing games.