Housing Starts, Manufacturing Surveys, Warsh & The Fed, EVs and Batteries, and this week in 1776
Economically, this Week
It’s hard to top a SpaceX IPO, but let’s give it a go.
Housing Starts continue to drop from historical highs in 2022. In May, starts came in at 1,177,000, down from the 1,392,000 in April. BTW, the historical high in 2022 was 1,800,000.
As interest rates go, so goes housing construction.
Manufacturing is still in positive territory, per the Empire State Manufacturing Survey of 200 businesses; Above 0 = expansion and below 0 = contraction. Survey says:
It was 19.6 in May. June was 5.7.
Well, that’s enlightening; that explains everything… so, what does 5.7 mean?
It has to do with the main survey question: Compared to the previous month, are general business conditions better, worse, or the same? For the folks who say conditions stayed the same, those numbers are tossed. The Fed then subtracts the worse from the better to arrive at a number. For June, that was 5.7.
Aaah. Clear as mud.
Stay with me… for the first week of June, 28.9% of respondents said that business conditions were better and 23.2% said they were worse. The difference is 5.7.
The previous month numbers were 44.5% better and 24.9% worse for a score of 19.6.
Basically, while still positive this month, it’s not nearly the same as last month.
Whew, that was torture. Apologies, dear Reader, but I wanted to dig a bit deeper.
Also this week: the Philadelphia Fed survey score was 10.3.
32% reported increases and 22% reported decreases for a 10.3 score.
The thing to note is that in both surveys, prices remained elevated, but I won’t get into those numbers.
And that’s enough for now.
Kevin Warsh and the Federal Reserve
The Federal Open Market Committee – FOMC – met this past week under the new Chair, Kevin Warsh.
This was his first meeting since he was sworn in on May 22 so everyone was watching this to see what would happen, like there would be fisticuffs or something.
Hmm. I wonder if he spent his entire first day meeting with HR, providing two forms of I.D., filling out the I-9, his W-4, reading the employee handbook, and opening a ticket with IT to get his password reset. At any rate…
Predictably, interest rates did not change (thank you, Captain Obvious).
What was notable is that a statement was issued that all 12 members of the FOMC agreed with. It read, in part:
Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.
Brevity is so refreshing.
The key thing is that Warsh established consensus. Yes, the statement was not controversial, but every business owner and professional knows that you build a relationship by building consensus, no matter how small.
Oh, and in my opinion, rates will go up this year, at least 0.25 percentage points.
The Beauty of Economics
Since the birth of the EV – Electric Vehicle – some folks have shown concern about what to do with all the spent batteries after they are no longer as efficient as they should be. It might be a bit of an environmental hazard. Well…
Another group of folks that focus on solving problems rather than lamenting them, thought about that as well.
So, what do you do with those batteries? You use them for large-scale energy storage.
Enter B2U Storage Solutions out of Los Angeles. Since 2020, they have been using used EV batteries to build electricity storage systems.
By “used”, that means EV batteries that have degraded to 70% or so. That doesn’t seem like much, but it can shorten driving distance and acceleration when in a car.
B2U can take the old batteries and insert them into a system without having to modify them. That makes it economical.
Introducing Waymo, the self-driving taxi service folks, owned by the Google people.
As it turns out, Waymo burns through a lot of EV batteries.
Fun fact, in 2025, there were 15,000,000 autonomous rides. This year, they are averaging 500,000 rides per week. …multiply by 52… yep, that’s a run rate of 26,000,000 assuming it doesn’t increase. Which it likely will.
I’m guessing that when they started this venture in 2020, they were expecting there would be a need. Fast forward to 2026, and all of a sudden, AI needs power and power backup. And it helps that California utilities are blackmailed… er… incentivized to produce green energy, no matter the cost.
As it also happens, California and Texas are the states with wind and solar energy generation; these battery packs provide storage for the renewable energy that isn’t being generated all of the time, like when the sun isn’t shining or the wind isn’t blowing.
Sorry, this is getting way too long.
My point is, Waymo needs to get rid of batteries, California and Texas need to store energy, and B2U found a way to facilitate that and make money out of it. Or at least attract venture capital. In other words, the batteries are not going into a landfill. Yet.
I mean, after we have taken all the time, energy, and wastewater to get the lithium out of the ground, we might as well keep using it.
This week in 1776 – June 22
As far as the debate for independence goes, this week was less eventful than the previous two, but no less urgent. The motion and second for independence was made at the Second Continental Congress, and the 13 colonies are debating the pros and cons.
Virginia had already adopted its own declaration of rights as well as a constitution.
Virginia, North Carolina, and New Jersey gave their delegates permission to vote for independence.
Tommy Jefferson was deep in the middle of writing the first draft of the Declaration of Independence.
Social media, in the form of Thomas Paine’s Common Sense, was circulating among the citizens and moving the narrative towards independence.
And just to keep these rebelling colonists on their toes, the British had a force of 30,000 men outside New York Harbour that would become the campaign to capture New York in early July.
The battle would define the spelling of Harbour for centuries to come.
Can you imagine trying to run your business or do your job in the middle of all of this political suspense and the weight of history behind you? It kind of makes California regulations look like a walk in the park. Or perhaps not.
Summer has officially started, and we are in the final buildup of America 250. The U.S. Men's National Team continues to do well and has advanced to the round of 32 in the World Cup. The crowd in Seattle belted out our National Anthem – as every crowd should – and the national team did not disappoint, handing a 2-0 loss to Australia. Visitors from around the world find themselves enthralled with America, and American products like ranch dressing, Buc-ees gas stations & C-Stores and Texas Roadhouse restaurants.
As we approach our 250th birthday, read a bit of history on how the Founding Fathers risked everything to start a new country.
All of this will make you stand a little taller.
