Yes the economy is still week, but last Friday’s dismal jobs report was still a head-scratcher since it was inconsistent with other reports (regional Fed reports, ISM, ADP, etc.).
Via Deutsche Bank, here’s the #1 reason to think it was probably a bum number:
Tax receipts are available daily and thus provide us with a real-time proxy for underlying income growth. While volatile because of their high frequency, the data are extraordinarily reliable because we know that individuals do not pay taxes on phantom income. In addition, tax receipts are never revised, which means that we can maintain greater confidence in what they signal, unlike many macroeconomic series which are subject to revisions long after their initial release. At the moment, tax receipts are foreshadowing powerful income creation, as shown in the chart below.
Photo: Deutsche Bank
According to our calculations, tax receipts rose nearly 7% in November relative to the comparable period last year. If sustained, this would be twice the average annual growth rate that prevailed during the last growth cycle from 2001 to 2007.
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