Tax withholding: real wage increase

What happened: Treasury Secretary Scott Bessent advised Americans to review and adjust their tax withholdings to increase their take-home pay, rather than waiting for a large refund. This would effectively provide an "automatic real wage increase," as it means they would not be overpaying taxes throughout the year.

Market impact: This narrative primarily affects individual taxpayers, but it could indirectly influence consumer spending and the broader economy. If more Americans follow this advice, it could lead to increased consumer spending, benefiting retail and related sectors.

What to watch next: The upcoming release of the IRS's 2023 Form W-4 (expected in late 2022) will show if the agency incorporates Secretary Bessent's advice into the form's instructions. Additionally, consumer spending data in the coming quarters will indicate if taxpayers have indeed adjusted their withholdings and increased spending.