Recent tax trends, not just in real time withholding taxes but also in excise tax collections data, still don’t give the Fed an excuse to loosen policy. If the Fed does announce a symbolic rate cut, it won’t be because the economy needs stimulus.
Gains in withholding and excise taxes have been solid. There’s no sign of any weakening in the tax data. The idea that the economy is weakening enough to force the Fed to cut interest rates several times this year is a well embedded but false narrative. I won’t predict whether the Fed will cave to the political pressure, but I believe that it would only worsen the illusion.
You can see whole picture, and the strategy that you can employ to protect and grow your capital in Lee Adler’s Liquidity Trader reports on real time Federal cash flow data. I send those reports to subscribers just after the end of month Daily Treasury Statement is issued on the first of the new month. Then I update that right after the Monthly Treasury statement which comes out between the 10th and 13th. That report contains additional detail.
Both reports tell us exactly what’s happening with the US economy with unmanipulated tax collections data that is actual, total, and real time.
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Excise Tax Collections Give Fed No Excuse
Meanwhile, here’s a look at some of the data on Excise taxes from those reports. This is just a small slice of the motherload of line by line data from the US Treasury ever day. I convert this data to clear charts that enable you to see the real trend at a glance. Vritually no one else tracks, charts, and explains this data for you. These charts are a lot more revealing than the often phony economic narrative that Wall Street and its media handmaidens feed us day in and day out.
The US collects excise taxes on a broad cross section of goods and services. They are based on unit volume of sales, not dollar value of sales. They have therefore been an excellent means of seeing the trend of the economy without the need to make haphazard inflation adjustments.
Total Excise Taxes rose 4% year to year in May. That’s about the same growth rate as in April. This solid rebound came after a weak March. Most excise taxes are volume based, which means that they reflect actual quantity increases. The numbers suggest strong economic growth. There’s certainly no excuse here for the Fed to cut interest rates or return to QE.
While The Top Line Grows, the US Economy is Failing Most People
Aviation and Miscellaneous taxes rose sharply in May but gas taxes fell. I show you that detail in the Liquidity Trader Federal Budget reports. I also report and chart real time weekly data on gasoline demand from the US Energy Information Agency. When we look at this additional detail, we see that while the top line numbers look good, the foundation of the US economy is getting weaker.
The holy grail of tax collections data is of course the withholding tax collections, which are booming. Jobs slowdown? Hardly. But there’s also an inflation component that’s revealing.
The question is, “Is it bullish or bearish?”
You can see all the tax collections data and charts for a clear view of what the US economy is really doing and what that means for the market. Get the answers in the Federal Budget reports in Lee Adler’s Liquidity Trader.
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