Federal Tax Receipts Indicate a Slowing Economy

Many people almost exclusively focus on GDP as a measure of how the economy is doing but that number has so many moving parts that it's easy to get more noise than signal.  Inventory building or a big import quarter or government spending can all have a large impact.  Another proxy to look at are federal tax receipts.  As you can see from the chart below, when the economy is doing well tax receipts also do pretty well, growing ~10% year-over-year give or take a few percentage points.  Right now our tax receipts are still growing, 6% year-over-year, but the momentum is going the wrong way.  And if you look at the data over the last 20 years, every time it has fallen to 6% growth or below we have ended up in a recession shortly thereafter.