US ECONOMY & POLITICS

Starts of U.S. Homes Increased Slightly in May, Permits Eased – Bloomberg, 6/16/2021

• U.S. housing starts rose slightly in May and applications to build dropped to a seven-month low, suggesting the pace of residential construction may be moderating after a recent run-up in building-materials costs.
• Residential starts rose 3.6% last month to a 1.57 million annualized rate, according to government data released Wednesday.
• April starts were revised down to 1.52 million. Building permits slipped 3% in May.
• Single-family starts rose 4.2% in May to an annualized pace of almost 1.1 million units
• Multifamily starts — which tend to be volatile and include apartment buildings and condominiums — increased 2.4% to 474,000
• Applications to build, a proxy for future construction, decreased to an annualized 1.68 million units in May, the slowest pace since October.
• The data suggest backlogs are continuing to build. The number of one-family homes authorized for construction but not yet started — a measure of backlogs — edged up to 142,000 in May, the most since October 2006.

Rents for single-family homes just saw the largest gains in nearly 15 years – CNBC, 6/15/2021

• Even as the pandemic ebbs and Americans get back to work and play, they still want more space at home.
• But with home prices hitting record highs, demand for single-family rental homes is soaring – and so are the rents.
• Single-family rents were up 5.3% year over year in April, up from a 2.4% year-over-year increase in April 2020, according to CoreLogic. That is the largest gain in nearly 15 years.
• Rents for single-family detached homes (not townhomes), were up an even stronger 7.9% compared with a year ago, as millennials in particular seek more outdoor space.
• Nearly half of millennials surveyed by Corelogic, and 64% of Baby Boomers, said they, “strongly prefer” to live in a single, stand-alone home.

U.S. Housing Market Needs 5.5 Million More Units, Says New Report – Wall Street Journal, 6/16/2021

• Construction of new housing in the past 20 years fell 5.5 million units short of long-term historical levels, according to a new National Association of Realtors report, which is calling for a “once-in-a-generation” policy response.
• U.S. builders added 1.225 million new housing units, on average, each year from 2001 to 2020, according to the report, which was prepared for NAR by Rosen Consulting Group.
• That figure is down from an annual average of 1.5 million new units from 1968 to 2000.
• The 5.5 million-unit deficit includes about two million single-family homes, 1.1 million units in buildings with two to four units and 2.4 million units in buildings of at least five units, the report says.
• The report also says that from 2010 to 2020, new-home construction fell 6.8 million units short of what was needed to meet household-formation growth and replace units that were aging or destroyed by natural disasters.
• To shrink the supply deficit, builders would need to exceed the long-term historical average pace of 1.5 million units a year, according to the NAR report.
• At 2.1 million units a year, near the level reached in 2005, it would take a decade to close a gap of 5.5 million units, the report says.

Fed Meeting Likely to Signal Possible Policy Shifts – Wall Street Journal, 6/16/2021

• Federal Reserve officials are set to provide updated details on their plans for eventually scaling back easy-money policies as they conclude a two-day policy meeting amid signs of accelerating economic growth and inflation.
• The Fed on Wednesday is likely to say after the meeting that it will maintain short-term interest rates near zero and keep buying at least $120 billion a month of Treasury and mortgage bonds.
• The new forecasts could show officials expecting to raise interest rates sooner than they anticipated in March, when most saw the benchmark federal-funds rate remaining steady through 2023.
• They are also likely to begin discussing when and how to start scaling back bond purchases.
• The new economic projections, postmeeting statement and Chairman Jerome Powell’s press conference Wednesday will give Fed officials their first opportunity to comment publicly on the latest inflation data and how they affect the policy outlook.

Democratic Leaders Start Talks on Second Infrastructure Bill – Wall Street Journal, 6/16/2021

• Democratic leaders began to discuss the contours of a broad-ranging child care, climate and education package Tuesday in an effort to appease the concerns of the party’s liberal wing over the narrower scope of a bipartisan infrastructure proposal under discussion.
• Progressive Democrats in both chambers criticized the size and breadth of a more limited agreement reached late last week by a bipartisan group of 10 senators.
• They threatened to withhold their votes unless they received assurances that it would be accompanied by a far-reaching package that could pass with only Democratic votes.
• Senate Majority Leader Chuck Schumer (D., N.Y.) acknowledged that many Democrats were wary of backing a more limited bipartisan infrastructure agreement without a guarantee that their other priorities would be addressed in a second package.
• That legislation is expected to advance through a process tied to the budget, known as reconciliation, that enables Democrats to pass it with a simple majority, rather than the 60 votes most bills need, but will require the support of every member of their caucus.
• Sens. Ed Markey (D., Mass.) and Jeff Merkley (D., Ore.) said they wouldn’t support a bipartisan infrastructure package without an ironclad guarantee that wide-ranging provisions to address climate change would be part of the second package.
• Centrist Sen. Joe Manchin (D., W.Va.) has said an infrastructure deal should have Republican votes, and he hasn’t committed to backing additional, party-line legislation after Congress passed a $1.9 trillion Covid-19 relief package earlier this year without GOP support.

EUROPE & WORLD

Israeli Airstrikes Hit Gaza as Nationalist March in Jerusalem Stokes Tensions – Wall Street Journal, 6/16/2021

• Israeli police fired rubber bullets at Palestinians trying to disrupt a right-wing nationalist march in Jerusalem, while Hamas militants launched incendiary balloons into Israel that triggered Israeli airstrikes in the Gaza Strip, raising the specter of renewed violence in the region.
• The Israeli military said it carried out a limited series of airstrikes on the militant group’s compounds across the Gaza Strip, marking the first time the rival forces have traded blows since the two sides agreed to a May 21 truce that brought an end to an 11-day conflict.
• The Israeli strikes in Gaza appeared to cause no deaths or injuries. But the Israeli military warned that it was “prepared for any scenario, including a resumption of hostilities, in the face of continuing terror activities from the Gaza Strip.”
• More than 250 people in Gaza and 13 people in Israel were killed during last month’s conflict.

China’s Economic Growth Moderates as Consumers Stay Cautious – Wall Street Journal, 6/16/2021

• China’s economic growth moderated in May as flattering comparisons to the pandemic-hit economic figures early last year tapered off and Chinese consumers continued to keep a close eye on their pocketbooks.
• Factory output, a key growth pillar in China’s pandemic recovery for more than a year, remained resilient last month, but investment and domestic consumption fell short of expectations despite a boost from a long holiday, weighed down by a fresh wave of Covid-19 infections.
• China’s industrial production rose 8.8% from a year earlier in May, slowing from April’s 9.8% pace, data from the National Bureau of Statistics showed Wednesday.
• The key gauge of factory activity was 13.6% higher than the level recorded in May 2019, long before the Chinese economy was hit by the new coronavirus, the statistics bureau said.
• Retail sales, a key gauge of China’s consumption, rose by 12.4% last month compared with a year earlier, slowing from the 17.7% year-over-year growth rate in April and falling short of the 13.6% gain anticipated by economists.
• The country’s headline measure of joblessness, the urban surveyed unemployment rate, fell for a third consecutive month, to 5.0% in May—its lowest level in two years.

China to Release Metal Reserves in Effort to Tame Commodities Rally – Wall Street Journal, 6/16/2021

• China said it would begin to sell major industrial metals from state stockpiles, an effort to squelch factory-gate price increases that have hit a 13-year high and are stoking fears of global inflation.
• As the world’s biggest buyer of a range of industrial commodities, China is using its market heft to try to quell the sharp rise in global metal prices over the past 12 months, including a 67% surge in copper, a bellwether for macroeconomic health.
• China’s latest move targets copper, aluminum and zinc, among other metals, and outlines a program of public auctions to domestic metal processors and manufacturers, the National Food and Strategic Reserves Administration said Wednesday.
• Beijing’s vast buying power over metals doesn’t necessarily guarantee its ability to tame global prices.
• London spot prices for aluminum traded largely flat on Wednesday from a month earlier, but have risen 5% from early June as investors shrugged off the likely impact of Chinese sales.

Alibaba Falls Victim to Chinese Web Crawler in Large Data Leak – Wall Street Journal, 6/16/2021

• A Chinese software developer trawled Alibaba Group Holding Ltd. ’s popular Taobao shopping website for eight months, clandestinely collecting more than 1.1 billion pieces of user information before Alibaba noticed the scraping, a Chinese court verdict said.
• The software developer began using web-crawling software he designed on Taobao’s site starting in November 2019, gathering information including user IDs, mobile-phone numbers and customer comments, according to a verdict released this month by a district court in China’s central Henan province.
• When Alibaba noticed the data leaks from Taobao, one of China’s most-visited online retail sites, the company informed the police, the court said.
• No user information was sold to a third party and no economic loss occurred, a spokeswoman said.
• About 925 million people use Alibaba’s Chinese retail platforms at least once a month, according to the company.

Inflation Jumps to 3.6% in Canada, Its Highest Since 2011 – Bloomberg, 6/16/2021

• Inflation in Canada accelerated to its highest level in a decade, in what policy makers are saying will only be a temporary run-up in prices.
• Consumer prices were up 3.6% in May from a year ago, the fastest annual gain since May 2011, Statistics Canada reported Wednesday in Ottawa. That’s up from a pace of 3.4% in April.
• On a monthly basis, prices rose 0.5% versus forecasts for a 0.4% increase.
• Rising prices for cars were among the biggest drivers of inflation last month. Car prices are up 5% from a year earlier, in part because of supply chain issues related to a shortage of semiconductor chips globally.
• Gasoline also gained in May, and is up 43% from a year earlier when prices were still affected by the pandemic shutdowns.

Factmonster – TODAY in HISTORY

• Senate candidate Abraham Lincoln declared, “a house divided against itself cannot stand.” (1858)
• President Franklin D. Roosevelt signed the National Industrial Recovery Act. (1933)
• Russia voted in its first independent presidential election. Boris Yeltsin eventually won in a runoff. (1996)
• The 9/11 Commission determined that Saddam Hussein had no strong links to al-Qaeda, contradicting White House beliefs. (2004)