Posted on August 16, 2021
In the first half of August, income and payroll taxes withheld from paychecks have continued to grow at about the same strong rates of recent months. Based on data from the Daily Treasury Statements, we estimate that withholding in the first half of August was about 13.5 percent higher than amounts in the same period two years ago in 2019. That is about the same as the 13.1 percent two-year growth recorded in both June and July, and the 13.7 percent two-year growth recorded three months ago in May (see chart below). We look at two-year growth to compare to a period before the recession; one-year growth rates compare to the depressed levels of a year ago and are currently quite high and hard to interpret. Note that we adjust the daily withholding data to standardize the makeup of business days across months and remove the estimated effects of law changes that have affected withholding but not wages and salaries. As always, we will continue to monitor the daily withholding data for any signs of movements off of the recent rates of growth. For our latest discussion of the implications of growth running at this level, see our previous post on withholding in July.
