Withholding tax collections have weakened in July, breaking down from the narrow range of 5-6% annual nominal growth they have been in through the second quarter. The usual pattern in the past several years had been a cycle lasting 3-4 months. A cycle low is due now and the numbers have strengthened over the past 4 days. Whether the sharp break of the previous 3 weeks means anything will depend on how far this rebound progresses over the next couple of weeks.
The break in the tax data and the weakening of stock prices this week may have much deeper implications which could shed light on why the US Treasury has built a massive rainy day fund, with nearly 4 times the cash it usually holds. Download this report to view the evidence and conclusions about the implications of the data.
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