The next big positive surprise in the US economy is likely to be that federal tax receipts are increasing faster than expected. That would certainly help to improve the budget deficit outlook and might make it easier to achieve at least some modest bipartisan agreements to lower the structural deficit and to reform the tax system.
I monitor the Treasury's daily data on federal tax receipts and deposits for individual and payroll taxes as well as for corporate income taxes. The daily data obviously are very volatile so I smooth them out with 260-day moving sums, which closely track the Treasury’s monthly data on a 12-month sum basis. The Treasury’s deposits of withheld income and employment taxes rose to a new record high on March 22. Corporate income tax receipts are the highest since February 2009.
Today's Morning Briefing: Decoupled. (1) The end has been postponed. (2) The moments after the Cyprus Moment. (3) Mr. Dijsselbloem's little fiasco. (4) Draghi to the rescue again. (5) Scrounging for good news in Europe. (6) More happy indicators in the US. (7) PMI down in Europe, up in US. (8) Houses are selling lickety-split. (9) Federal tax revenues are on the rise. (10) Earnings are still breaking records. (More for subscribers.)