Tax refunds still down Presented by U.S. Bank

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No relief for GOP on tax refunds (yet) — Despite claims from the administration that tax refunds are catching up to their pace from last year, that is not happening yet, per Morgan Stanley: “Tax refunds have continued to flow in at a somewhat feeble rate, with the latest Treasury data through February 21 showing cumulative refunds down 3.6% relative to the same date last year.”


Still, Morgan Stanley and others continue to believe that refunds will catch up to last year in the coming weeks. Taxpayers receiving the EITC and the Additional Child Tax Credit won’t get them until Feb. 27 at the earliest. (See below for why refunds are such a big deal to the economy).

More heat on Trump vs. China — Adam Behsudi, Doug Palmer and I write here about growing concern among Trump allies and close China watchers that the president is going to declare victory on a deal that doesn’t do very much. These people say one key is to ensure that the U.S. can re-impose tariffs without the threat of China retaliating.

They also argue that the only deal worth having would include sweeping changes to China’s state-run economic policies. One concern on the enforcement front is that if China does agree not to retaliate with tariffs they could use other means such as delaying customs procedures or refusing shipments.

The Trump World Examination Begins — The House Judiciary Committee — which can impeach the president — formally launched a massive probe into every aspect of Trump’s world. Welcome to life with a Democratic House.

GOOD TUESDAY MORNING — Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.

DRIVING THE DAY — Senate Judiciary subcommittee has a hearing at 2:30 p.m. on monopolies in the U.S. economy … ISM Non-manufacturing Survey at 10:00 a.m. excepted to rise to 57.3 from 56.7 … New Home Sales at 10:00 a.m. expected to dip to 587K from 650K … Sen. Brian Schatz (D-Hawaii) plans to file his Wall Street Tax act, which would put a small tax on stock transactions.

ALSO TODAY: The North American Securities Administrators Association holds a briefing on the Hill at 1:30 p.m. about their legislative agenda. 2220 Rayburn.

FIRST LOOK: MANUFACTURING OPTIMISM REMAINS — Per results of the

The National Association of Manufacturers: “The Manufacturers’ Outlook Survey for the first quarter of 2019 … shows nine consecutive quarters of record optimism, with an average of 91.8 percent of manufacturers positive about their own company’s outlook over that time frame, compared to an average of 68.6 percent across 2015 and 2016.” Read more.

GET SMART FAST — Check out my latest “U.S. Politics in 60 Seconds” video for GZero media.

SUMMERS NOT A FAN OF MMT — Larry Summers in WaPo: “At a moment of economic and political frustration, some in the more extreme wing of the out-of-power political party are seizing on the possibility of a free lunch to offer politically attractive ways out of economic difficulty.” Read more.

REPORT: FAMILIES COUNT ON TAX REFUNDS — POLITICO’s Aubree Eliza Weaver: New research from the JPMorgan Chase Institute shows that tax refunds and payments are among the most important financial events American families see each year, and play a major role in the spending patterns of families who receive them.

In fact, many families put off other spending and allow credit card debt to pile up while they wait for their refunds and, upon receipt, the average family uses a fifth of that refund specifically to pay down bills, including credit card and health care debt.

And that refund check often extends well beyond tax season, too, fueling spending and saving for more than half the year. “Six months after the refund, the average family has 28 percent of the refund either transferred to savings accounts or remaining in its checking account … The average checking account balance remains elevated by $404.” Read more.

NON TRUMP NEWS — A reader pointed out we maybe do too much Trump in these pages. Probably a fair point. So a couple big stories from the housing world. First via Troy McMullen in the WP: “In 2004, the pinnacle of homeownership in the United States, nearly half of all African American families owned a home, according to census data. …

“Despite a strengthening economy … homeownership levels for that group have dropped incrementally almost every year since 2004. It fell to 43 percent in 2017, virtually erasing all of the gains made since the passage of the Fair Housing Act in 1968” Read more.

From David H. Stevens, Senior Advisor at Mortgage Media: “For FY 2018, the overall home-ownership rate in America stood at 64.4% with white-only households at 73%, black-only households at 42.9%, and Hispanic-only households at 47.1%.” Read more.

Q4 COULD GO LOWER — Via Macroeconomic Advisers: “Core construction spending was revised lower for October and November and was below BEA's assumption for December, implying less fourth-quarter construction spending and less growth of construction spending in the first quarter.

“As a result, we lowered our tracking estimate of fourth-quarter GDP growth by one-tenth to 2.5% and lowered our tracking forecast of first-quarter GDP growth by one-tenth to 1.1%.”

SENATE TO REBUKE TRUMP ON NAT’L EMERGENCY — Our Burgess Everett: “Senate Majority Leader Mitch McConnell acknowledged … that the Senate will pass a resolution blocking … Trump's emergency declaration on the southern border. The Kentucky Republican's comments underscore his inability to shield the president from a bipartisan rebuke, though McConnell added that he expected the House to uphold the president's veto.” Read more.

The 2020 Election. The new Congress. The Mueller investigation. … Keep up with POLITICO Playbook. Be in the know. Sign up today here.

HEALTH CARE, TECH LEAD STOCK LOSSES — AP’s Damian Troise and Alex Veiga: “Health care companies led stocks lower on Wall Street Monday as investors waited for more details on reports that the U.S. and China are moving closer to a deal to resolve their costly trade dispute. The sell-off was most pronounced in sectors that have shown strong gains over the last two months, including health care and technology. Financial stocks also took heavy losses.” Read more.

DOLLAR HOVERS NEAR TWO-WEEK HIGH — Reuters’ Shinichi Saoshiro: “The dollar held near a two-week high against its key rivals on Tuesday, underpinned by a resilient economy and a flagging euro ahead of an upcoming European Central Bank policy meeting. Higher U.S. bond yields kept the dollar well bid, and though rates were off overnight peaks, traders bet the greenback had more going for it than some of its peers.” Read more.

TRUMP WARS HITTING U.S. ECONOMY HARD — Bloomberg’s Shawn Donnan: “Trump regularly declares that he’s winning his trade wars. Yet evidence is growing that the U.S. economy is a net loser so far.

“In two separate papers published over the weekend, some of the world’s leading trade economists declared Trump’s tariffs to be the most consequential trade experiment seen since the 1930 Smoot-Hawley tariffs blamed for worsening the Great Depression. They also found the initial cost of Trump’s duties to the U.S. economy was in the billions and being borne largely by American consumers.” Read more.

CHINA SETS 2019 ECONOMIC GROWTH TARGET — AP: “China’s top economic official announced a robust annual growth target and a 7.5 percent rise in military spending as China opened a legislative session Tuesday that has been overshadowed by a trade war with Washington. ...

“[Premier Li Keqiang] set this year’s growth target at 6 to 6.5 percent. That is off slightly from last year’s 6.6 percent growth, a three-decade low, but would be among the world’s strongest if achieved. The announcement reflects official determination to shore up slowing economic activity in the face of U.S. tariff hikes and cooling global demand.” Read more.

FIDELITY UNDER FIRE OVER 401(K) FEES — Bloomberg’s Michael McDonald: “Fidelity Investments is facing more scrutiny over fees it charges some mutual funds for using its platform to access retirement plan customers. The Massachusetts Secretary of the Commonwealth said its securities division sent a letter on Feb. 27 to Boston-based Fidelity requesting information about those fees.” Read more.

NEW BOARD MEMBERS — New board members at the Partnership for Public Service include Morgan Stanley’s Tom Nides and Goldman’s Dina Powell.

NEW FROM S&P — Via a new report: “In 10 of 11 countries, women said they are less prepared than their male peers to deal with a financial setback. More women than men around the world said they were in just ‘fair’ or ‘poor’ financial shape.” Read more.

WELCOME TO THE WORLD — Josh Younger, managing director at JPMorgan, and Megan Wall-Wolff, a criminal defense attorney, welcomed William WallWolff-Younger.

NEW IN CRYPTO — Per release: “Crypto finance company Circle (backed by Goldman, among others) received FINRA approval to acquire SeedInvest, the NY equity-crowdfunding platform whose CEO, Ryan Feit, played an instrumental role in the passage of the JOBS Act in 2012.” Read more.

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