- Advertisement -spot_img
Monday, August 2, 2021

What wood can tell us about the economy right now.

Lumber prices have soared over the past year, despairing that it will be a pandemic, driving up the cost of new homes and serving as a compelling point in the debate about whether government stimulus efforts have led to 1970s-style inflation. risked its return.

The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic hit idle mills slowed by an already anemic construction sector since the 2008 financial crisis. was. As Matt Phillips of The New York Times reports, lumber futures hit new highs in early May, exceeding $1,600 per thousand board feet.

But since then, prices for those same plywood sheets and pressure-treated planks have plummeted, as mills restarted or ramped up production, and some customers put off their purchases until prices came down. For example, lumber prices in the futures market are down more than 45 percent from their peak, falling below $1,000 for the first time in months. It’s still high – from 2009 to 2019, prices averaged less than $400 per thousand board feet – but the sell-off has been gaining momentum over the past few weeks.

It’s a dance of supply and demand that has convinced many experts and the Federal Reserve in their belief that there will be painful price jumps for products like airline tickets and used cars as the economy returns to normal.

Why have prices dropped so fast? This is partly because they have increased production in the country’s nearly 3,000 sawmills.

Mostly concentrated in the rich belt of southern yellow pine that stretches from the woods of East Texas to the Carolinas, mills buzzed back to life in a flurry of selling the lumber for prices few might have imagined a few years earlier.

“Nobody’s running to capacity right now,” said Joe Hankins, sales manager for Hankins Lumber, a sawmill and lumber company in the north-central Mississippi city of Grenada.

The professional home construction industry, the biggest source of timber demand, is shrinking at an alarming pace, with some builders citing high prices for lumber as a reason to put a halt to construction.

Those decisions by consumers and companies are a major reason some analysts believe that the recent rise in inflation is the result of a temporary mismatch in supply and demand, not all that is pouring into the economy as a harbinger of runaway price increases. money.

Christina Hooper, chief global market strategist at investment management firm Invesco, said the lumber market’s behavior is a sign of consumer discretion.

“We don’t have the kind of buying frenzy that creates constant inflation,” she said.

Nation World News Deskhttps://nationworldnews.com
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
Latest news
Related news
- Advertisement -

Leave a Reply