Federal tax collections data gives us a leg up on the market, because it tells us what to expect when the lagging economic data indicators are released later. That puts us ahead of the crowd, which is waiting for biased Wall Street pundits to interpret already stale, manipulated data, when it’s finally released. Meanwhile we already know what the facts are.
Tax data has told us whether the lagging economic indicators are promoting a false narrative. Thanks to statistically massaged data, and deliberate, or unknowing misinterpretation by the talking heads, that can go on for months. But we know the facts.
More importantly perhaps, the tax data has told us what the Fed will be seeing when it gets the lagging economic data. That helped us to know whether incoming economic data will keep the Fed on track or not.
Now, however, the picture has gotten fuzzy. The big tax cuts enacted into law at the end of 2017 have begun to impact tax collections. That makes it virtually impossible to analyze year to year changes on a like versus like basis. It will be several months, and perhaps the whole year, before we can make these year to year comparisons in a way that reflects the actual trend of the US economy.
In other words, Trump’s tax cuts are hiding the “big picture” right now when it comes to market predictions.