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TrimTabs
- Press Release - Jun 30, 2005 TrimTabs Reports Surge in Personal Income: 10+% Increase in Take-Home Pay Indicates Federal Reserve Rate Hikes Likely to Continue Santa Rosa, CA – June 30, 2005 – As TrimTabs Personal Income reported this week, take-home pay has increased a staggering 10.8% year-over-year to date. This is one more indicator that the current U.S. economic boom is likely to keep the Federal Reserve from halting its rate hike program any time soon. Our research specifies that wages and salaries for the 135+ million U.S. workers subject to withholding rose 6.8% year-over-year over the past four weeks. So far this year, the take-home pay of people subject to withholding has jumped by $115 billion. In addition, "Other than withheld" income taxes paid by individuals to Uncle Sam are 27.9% higher so far this year ($265.37 billion) than they were over the same period last year ($207.41 billion). This $58 billion increase in taxes—assuming a 25% tax rate—means that take-home pay for those paying "Other than withheld" income taxes rose by $174 billion to $796 billion from $622 billion. In other words, even though people working at jobs subject to withholding far outnumber people who pay estimated taxes, the take-home pay of people not subject to withholding has surged 51% more than the take-home pay of people subject to withholding! This data suggests that single-person shops generating 1099 income are leading the current boom. As We Predicted, Commerce Department Revises Upward Its Estimate of First Quarter U.S. GDP Growth. Widespread Fears of Slowing Economy in First Quarter Were Unfounded. The Commerce Department reported yesterday that U.S. GDP rose at an annualized rate of 3.8% in the first quarter, which was significantly higher than its original estimate of 3.1%. This 3.8% growth rate was equal the growth rate in the fourth quarter. In other words, the widespread notion that the U.S. economy was losing its footing in the first quarter was off-base. In our Overnight Liquidity Update on April 28, 2005, we wrote, "The idea that the U.S. economy is stagnating is complete nonsense." We argued at length that growth in the first quarter was much stronger than the Commerce Department’s original estimate of 3.1%. Once again, the real-time data we track called the economic outlook more accurately. Stock Prices Could Surge Once Rest of World Realizes U.S. Economy Continuing to Grow Regardless of Oil Prices and Rising Short Term Interest Rates. Many investors are convinced that a major economic slowdown triggered by soaring crude oil prices and rising short term interest rates is right around the corner. Yet the Conference Board reported this past Tuesday that its Consumer Confidence Index jumped to 105.8 in June, its highest level in three years! Could surging take-home pay be the main reason consumers are feeling upbeat? As long as corporate America continues shrinking the float of shares at anywhere near the $1.4 billion daily pace of the past month, stock prices should surge once the rest of the world realizes that $55+ crude oil is not putting the U.S. economy out of business. If crude prices continue to fall and the S&P 500 climbs above its March high of 1,225, big inflows from momentum players could set this market on fire. # # # About TrimTabs TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity, including mutual funds and Exchange Traded Funds, as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors - including hedge fund managers, market strategists, and portfolio managers - with trading strategies since 1990. TrimTabs liquidity research is unique. It is a macro timing tool to predict the direction of the stock market. For sample research, subscriptions, and to order a copy of Biderman's new book, visit www.TrimTabs.com. CONTACT: Madeline
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