Weekly Economic Update 06-19-26: Industrial Production; Home Builder Confidence; Building Permits & Housing Starts; Retail Sales; and the Leading Economic Index

Chair Warsh held his first FOMC meeting, and he made it clear that there is a new sheriff in town.

The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents. 

OK, so my wife was right. I couldn’t help myself. I couldn’t break my streak of weekly blog posts. But at least I did it while I was watching the 2026 World Cup. You can have the Olympics (summer or winter) - I have no interest. But every four years when the World Cup rolls around…forget about it. My productivity drops, and I am totally consumed. When I was younger, I used to absolutely HATE soccer. Then, my son got very into it, and I came to appreciate how elegant and difficult the sport actually is when played well. And watching national teams compete for the title of World Champion…I can’t get enough.

Anyway, before the next match comes on, let me update you on all the economic data for the week.

Oh, but before I do that…Kevin Warsh presided over his first Fed meeting today. They left interest rates unchanged. The President must be thrilled. In fact, to add insult to injury, the committee’s updated projections signaled a likely quarter-point hike later this year. Hate to say “I told you so” but…I did. Be honest…inflation is at a three-year high. Cuts have got to be off the table.

The bigger story from the first Warsh meeting was institutional. Chair Warsh announced five task forces to overhaul Fed communications, the balance sheet, and other operations, framing it as the “regime change” he’d promised. The policy statement was slashed to roughly 130 words (from 300+) and stripped of forward guidance, which he called “not well-suited to the current policy conjuncture.”

There is clearly a new sheriff in town.

Industrial Production

Industrial production rose just 0.1% in May, a little slower than the 0.3% expected, though the sting is softened by an April revision up to 0.9% from 0.7% (full release here). However, manufacturing output was flat — up a rounding-error 0.05%, the weakest month of the year — as factory production rose in only about a third of categories. The one source of real growth was mining, up 1.3% on oil and gas, while utilities slipped 0.4%. In other words, the part of this report that describes American factories went nowhere. But that is OK. Given how strong manufacturing has been in recent months, taking a little breather is fine…as long as it is just a little breather.

Even so, there were still sectors worth noting. Durable-goods production rose 0.8% with broad gains, and business equipment kept climbing — up 0.6% on the month and 5.7% from a year ago, the same capex story we keep seeing in the durable-goods reports.

But nondurables fell 0.9%, dragged down by petroleum, plastics, and textiles, and even the business-equipment pace is cooling. Year-over-year, output is up 1.7% and manufacturing 1.4%, both the best since last November. In fact, it is actually negative once you adjust for inflation, and neither has been sustainably above 2% in nominal terms since 2022.