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Tax Man Deserves Some Blame for Disappointing U.S. Retail Sales

Last-minute tax submissions helped depress shopping
U.S. Department of the Treasury Internal Revenue Service (IRS) 1040 Individual Income Tax forms for the 2014 tax year are arranged for a photograph in Tiskilwa, Illinois, U.S., on Monday, March 16, 2015.
Photographer: Daniel Acker/Bloomberg

U.S. retail sales again proved to be a disappointment. Instead of rising by the 0.2 percent forecast by economists, sales were little changed in April from March, according to data released Wednesday by the Commerce Department. The flat reading was all the more surprising because it came against a background of an improving jobs market, rising household incomes and lower gasoline prices. 

In a note to clients, Ted Wieseman of Morgan Stanley pointed to a possible explanation for some of last month's weakness: a surge in household payments to the federal government before the April 15 deadline for filing individual tax returns. Americans forked over $44 billion more in taxes during this year's filing season than they did in 2014, according to the Congressional Budget Office. Income-tax refunds, meanwhile, were little changed from a year ago, at $202 billion.