Despite all the hand-wringing about lower tax refunds for early filers, Morgan Stanley says refunds are slightly up from last year.

News headlines have been trumpeting a decline in tax refunds and implying the tax overhaul passed by Congress in December 2017—the Tax Cuts and Jobs Act, or TCJA—has failed to fulfill its promise to cut taxes for the average American family. As of Feb. 8, the average 2019 refund was down 8.7% from the year before, according to U.S. Treasury Department data.

But...