We've remarked before on what appear to be overly optimistic revenue growth rate projections by the President and Congress. Both President Bush's proposed FY 2008 budget (which assumes extension of the 2001 and 2003 Bush tax cuts) and in the House and Senate budget resolutions (which do not) project 5-7 percent annual revenue growth through 2012. A column in last week's New York Times points out that federal revenue jumped 12.7 percent in 2005 and 11.8 percent in 2006. But it adds a cautionary note about future receipts: [I]n the last two quarters of 2006, taxes collected by the states rose 4.6 percent and 4.3 percent, respectively, from the comparable 2005 quarters. Adjusted for inflation, however, revenues barely budged. Those second-half growth rates, the weakest since 2003, represented sharp declines from the near-double-digit rates in the first half. (emph. added) How do trends in federal vs. state revenue relate and what conclusions can be drawn from the current contrast in the condition of the coffers? Some analysts say the state data, which more closely mirrors the experience and habits of typical consumers, can be an important coincident indicator. "If you were to see a significant decline in the amount of state sales taxes, it would be a good indication that the economy is struggling," said Bert Waisanen, fiscal analyst at the National Conference of State Legislatures... At the federal level, however, growth in tax revenue is more likely to be a lagging indicator.