Withholding tax collections through May 2 have been much weaker than the year ago period, and weaker versus last month. This does not bode well for the budget deficit. It suggests that there could be be more Treasury supply than forecast by the TBAC. Non-subscribers, click here for access.
It also suggests a very weak jobs report for April assuming that the BLS doesn’t adjust the weakness away in the various statistical tricks it applies to smooth the data. Non-subscribers, click here for access.
That’s never a safe assumption, but sooner or later reality catches up with them. Last month’s report should have been weaker than it was, based on March tax collections. The BLS reported 236,000 new jobs in March. Based on withholding for March, that number should have been zero or negative. There was no improvement in April, so this should be the month where reality catches up with them. Non-subscribers, click here for access.
If it does, the R House Majority will have absolutely no incentive to reach a deal to raise the debt limit. The worse they make the Administration look, the better it will be for them politically. Non-subscribers, click here for access.
Meanwhile, Madame Secretary has warned us that the drop dead date for the debt limit is June 1. Supposedly that’s when the Treasury will run out of money. I did a few back of the envelope calculations, and it is completely plausible that they’ll run out of cash by the end of May. Non-subscribers, click here for access.
You’ll want to see the ugly details so that you can be prepared to take the appropriate steps to protect yourself, and even profit from the situation. Non-subscribers, click here for access.
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