HOUSING SLOWS. For the third month in a row, housing starts -- which is to say, the number of new residences under construction -- dropped . Interestingly, analysts had expected a very slight slowdown this month, predicting a 0.5 percent decline. The real number? 7.4 percent. Meanwhile, builder's confidence dropped from 51 in April to 45 in May -- the lowest number since 1995 -- meaning most builders now see a negative housing market. That�s not terribly good news, but so long as the market cools at a relatively calm pace, we shouldn't see any particularly catastrophic impacts. But watch for those variable rate mortgages -- interest rates are rising, and if they start racing up while the market goes down, the economy is in serious trouble.

--Ezra Klein