The stock and bond markets had a surreal week. Up on Wednesday following Powell’s remarks then crashing through to Friday as economic reality was restored. It is illustrative of the tug of war between the FED and the economy that frustrates it.
The Congressional Budget Office released government financial data for April a few days ago. Included is an item called “withholding tax” which is the tax employers pay to the IRS each month on behalf of their employed workers. April shows a significant fall from a cumulative 9% YoY increase (October to March) down to 8% (October to April) which is not consistent with rising employment as this would imply rising, not falling, withholding taxes. Now that patterns after COVID are normalizing I will be using this metric more often.
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