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UBS Trending Extra: Tax cuts and gas prices · UBS Trending

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  It's no surprise
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  that a lot of questions right now
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  center on tax cuts and gas prices.
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  You've probably seen plenty of chart books on the U.S. economy.
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  So instead, from an economist lens, I want to tackle
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  a few of the questions I'm getting most often
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  from clients and colleagues. Are you ready?
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  Number one,
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  how much cash have households received so far from the OBBBA?
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  This is something I love to track closely
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  using the Treasury Daily statement.
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  And here's a chart to visually show you.
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  And the answer is quite a lot.
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  Tax refunds are running up about 16% higher from last year.
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  And tax payments
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  those April 15th checks are down once you adjust for strong
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  capital gains, and withholding taxes are lower as well.
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  So putting it all together,
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  we estimate
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  roughly 160 billion in extra household spending power this year.
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  And that's already showing up in the data
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  as good spending rose around 7/10 in March.
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  But here's the catch.
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  Like many Americans,
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  I enjoy summer road trips and board games,
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  and this year feels a bit like monopoly.
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  You pass go,
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  you get $200, and then immediately
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  you need a hand over because you land on your kid's railroad.
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  It's like getting a raise,
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  but your commute quietly takes it back.
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  And number two,
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  our gas prices wiping out the tax cut.
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  We do expect oil prices to edge lower by year end, but at around
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  current levels,
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  higher gas prices can effectively wipe out much of the tax
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  cut boost, leaving less room for vacations and new cars.
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  It limits how much that recent spending momentum collapsed.
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  We'll be watching the tension between fiscal tailwinds and energy
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  headwinds closely,
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  so stay tuned to learn more about our latest views, please
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  see our report "Macro FAQs to forecast"
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  and visit ubs.com/cio