Housing starts are expected to total 1.029 million in tomorrow’s update for May, based on The Capital Spectator’s median econometric forecast (seasonally adjusted annual rate). The projection represents a modest drop vs. the previously reported 1.072 million for April.
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Industrial production in May rebounded sharply from April’s decline, the Federal Reserve reports. Output advanced 0.6% last month, a strong reversal to the upside after a 0.3% drop in the previous month. The manufacturing component also revived, growing 0.6% in May vs. a 0.1% slump in April. More importantly, the year-over-year trend in industrial production (and manufacturing) continues to show improvement. Although the latest crisis in Iraq and the resulting rise in oil prices introduce a new phase of uncertainty for analyzing macro risk, today’s upbeat news at least tells us that the industrial slice of the US economy has been humming along at a healthy clip.
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Iraq, oil markets, and the U.S. economy
Econobrowser (James_Hamilton) | June 15
To summarize, my view is that the U.S. economy is less vulnerable to an oil price shock than we were in 2007. Moreover what has happened on the ground so far in Iraq should not have major immediate implications for the price of oil.
But longer term, we may have just witnessed the creation of an important new power in the Middle East. Among other spoils, ISIS apparently seized $425 million from the Iraq central bank in Mosul. From ABC News:

Analysts say the financial and strategic spoils of ISIS’s capture of Mosul and Tikrit could provide a significant, nearly unstoppable boon to its Syrian arm, helping turn the tide in the months-long battle for Deir Ezzor.

So the immediate implications for the U.S. economy may turn out to be minor. After that? The world seems to be changing.
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