With lumber prices falling, inflation risk loses its sting


Meanwhile, while the price has declined in the consumer market, demand has decreased.

Sean Church, editor of Fastmarkets Random Lengths, said, “The do-it-yourself sector isn’t as strong as it was a year ago when homeowners were laid off and home improvements are being made using incentives and travel money.” was.” Trade publication that covers the industry.

The professional home construction industry is also the largest source of timber demand. fall at a breakneck speedSome builders cited high timber prices 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. With money

The Federal Reserve has created trillions of new dollars since the coronavirus hit and kept interest rates at rock-bottom levels. At the same time, the federal government is driving record losses by spending on relief measures such as stimulus checks, increased unemployment benefits and small-business relief efforts to accelerate recovery from the pandemic.

Recent economic indicators have bolstered the idea that such easy money will trigger inflation: in May, the Consumer Price Index, a broad measure of the cost of specific goods that Americans buy, 5 percent rose Compared to a year ago – fastest pace in 13 years.

But the runaway inflation seen in the United States in the late 1960s and 1970s is as much a psychological process as an economic one. When inflation expectations pick up, people are convinced that prices are on a never-ending escalator. They now rush to buy at any price, and the rise becomes a self-fulfilling prophecy.

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



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