Initial Guidance | 20 June 2016

US housing construction eased 0.3% in May, but rebounded 9.5% in year-over-year terms. “Despite monthly volatility, housing starts continues to be a bright spot in an otherwise supply constrained market,” says Trulia Chief Economist Ralph McLaughlin. Note, however, that newly issued building permits fell last month and posted an annual loss for the second month in a row.

The Atlanta Fed’s GDPNow estimate for US economic growth in the second quarter was unchanged at 2.8% (seasonally adjusted annual rate) in Friday’s update. If the projection holds, growth will post a solid rebound in Q2 after Q1’s tepid 0.8% rise.

The New York Fed’s nowcast, by contrast, sees a softer rebound for Q2 GDP growth: 2.0%, based on the bank’s June 17 update.

The Atlanta Fed’s survey of inflation expectations via businesses in its region ticked lower in Friday’s update, dipping to 1.8% for the year ahead—down from 1.9% in the previous month.

Europe warned Britain that a vote to leave the European Union on Thursday in the UK referendum will come with a price tag. “There is no appetite to be nice on the day after,” says Camille Grand, the director of the Foundation for Strategic Research in France. “Whatever the British say or feel, there will be a price to pay, if only to prevent further attempts to exit the EU.”

New polls suggest that support was firming for keeping Britain in the Europe Unionnews that accompanied a rebound in global stock markets.

Unemployment in California,
which boasts the largest state economy in the US, fell to a nine-year low of 4.7% in May. “It’s an expansion, it’s not a boom,” notes Jeff Michael, an economist at the University of the Pacific. “There’s still a ways to go in terms of incomes and getting back to where things were.”