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As Lumber Prices Fall, the Threat of Inflation Loses Its Bite

jpn

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The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May.​
But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.​
It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.​

Key paragraph:
“Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,” said Jan Hatzius, chief economist at Goldman Sachs.

Good ol' "Econ 101." The rock against which ideology and wishful thinking smashes into bits.
 
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Phys251

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The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May.​
But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.​
It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.​

Key paragraph:
“Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,” said Jan Hatzius, chief economist at Goldman Sachs.

Good ol' "Econ 101." The rock against which ideology and wishful thinking smashes into bits.

A surge in demand as the pandemic slowed down was inevitable. Supply will soon catch up.
 

RAMOSS

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The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May.​
But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.​
It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.​

Key paragraph:
“Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,” said Jan Hatzius, chief economist at Goldman Sachs.

Good ol' "Econ 101." The rock against which ideology and wishful thinking smashes into bits.
You forgot the link

 

Threegoofs

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The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May.​
But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.​
It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.​

Key paragraph:
“Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,” said Jan Hatzius, chief economist at Goldman Sachs.

Good ol' "Econ 101." The rock against which ideology and wishful thinking smashes into bits.
Yet I guarantee Foxnews will be moaning about “Biden’s massive inflation” for the next four years- if it exists or not.
 

JustAFella

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I predict Nord Stream will be the other thing no conservative would shut up about which we will no longer hear about again in a month.
 

washunut

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The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May.​
But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.​
It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.​

Key paragraph:
“Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,” said Jan Hatzius, chief economist at Goldman Sachs.

Good ol' "Econ 101." The rock against which ideology and wishful thinking smashes into bits.
Where have we seen the jump in lumber prices impact the inflation numbers?

Yes there is a jump due to the economy reopening but there are other pulls on inflation that are less "transitory". I believe the Fed signaled as much last week.
 

TomFitz

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Yet I guarantee Foxnews will be moaning about “Biden’s massive inflation” for the next four years- if it exists or not.

They’re a little behind on ranting about debt, as the right wing noise machine usually does when the GOP is out of power. (but never at all,when they’re in, which is when the big jumps in federal spending and hiring usually happen).
 

jpn

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Where have we seen the jump in lumber prices impact the inflation numbers?
Yes there is a jump due to the economy reopening but there are other pulls on inflation that are less "transitory". I believe the Fed signaled as much last week.
You believe the Fed signaled as much last week? By suggesting they may increase interest rates in...2023?

Wow. If that's not a sign of sheer terror, what is?
 

washunut

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You believe the Fed signaled as much last week? By suggesting they may increase interest rates in...2023?

Wow. If that's not a sign of sheer terror, what is?

The reality is NO ONE KNOWS what inflation will do. That certainly includes you and I.
 

TU Curmudgeon

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The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May.​
But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.​
It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.​

Key paragraph:
“Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,” said Jan Hatzius, chief economist at Goldman Sachs.

Good ol' "Econ 101." The rock against which ideology and wishful thinking smashes into bits.

Time to put another set of tariffs on Canadian lumber (because it is "subsidized" [due to the fact that the Canadian lumber companies only have to pay for the trees that they cut {which means that they pay from now until doomsday <thereby providing a steady revenue stream to the people who own the land/trees>} and, unlike American lumber companies, don't have to buy the land that the trees grow on {which means that they only pay once <thereby providing a revenue stream that dries up almost immediately>}] in order to "stabilize the market".
 

Metric Mouse

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Time to put another set of tariffs on Canadian lumber (because it is "subsidized" [due to the fact that the Canadian lumber companies only have to pay for the trees that they cut {which means that they pay from now until doomsday <thereby providing a steady revenue stream to the people who own the land/trees>} and, unlike American lumber companies, don't have to buy the land that the trees grow on {which means that they only pay once <thereby providing a revenue stream that dries up almost immediately>}] in order to "stabilize the market".
Biden is way ahead of you. Because, you know, tariffs that Americans pay hurts Canada... somehow.

 

jpn

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The reality is NO ONE KNOWS what inflation will do. That certainly includes you and I.
No kidding. And it's in the face of this uncertainty the Fed has to make decisions, including not to overreact to temporary price increases in some areas. Those decisions is what this and similar threads are about.
 

washunut

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No kidding. And it's in the face of this uncertainty the Fed has to make decisions, including not to overreact to temporary price increases in some areas. Those decisions is what this and similar threads are about.

Powell has not explained by what he means as temporary. Perhaps you can take a shot.
 

jpn

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Powell has not explained by what he means as temporary. Perhaps you can take a shot.
Jerome can't come to the phone right now, so this will have to do:

Most forecasters and the Fed itself expect the increases to be only temporary.
“Inflation has risen, largely reflecting transitory factors,” the central bank said in its April statement, released on Wednesday.
[...]​
Fed officials regularly point out that inflation has been too tepid in recent years, not too high, and they don’t expect that to change quickly. To raise rates, they say, they would need to see that inflation was going to remain higher sustainably — for instance, if it came alongside heftier wage increases.
 

Visbek

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Powell has not explained by what he means as temporary.
Actually, he has. At a hearing before Congress, he said these supply issues would resolve themselves in a few months.

The Fed's forecast for inflation in 2021 is 3.4%. Given that recent numbers were above that, it means they expect inflation to calm down, again, in just a few months.
 

TU Curmudgeon

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Biden is way ahead of you. Because, you know, tariffs that Americans pay hurts Canada... somehow.


I don't actually consider that the US Department of Commence is an agency of anything other than American corporations (it acts in the best financial interests of American corporations REGARDLESS of which wing of the "American Oligarchic Capitalist Party" is in power and REGARDLESS of the effects of its actions on the American people).
 

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The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May.​
But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.​
It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.​

Key paragraph:
“Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,” said Jan Hatzius, chief economist at Goldman Sachs.

Good ol' "Econ 101." The rock against which ideology and wishful thinking smashes into bits.
Unsurprised, I remain.
 

TobyOne

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It's a good thing that all anyone spends money on is lumber.
 

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The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May.​
But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.​
It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.​

Key paragraph:
“Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,” said Jan Hatzius, chief economist at Goldman Sachs.

Good ol' "Econ 101." The rock against which ideology and wishful thinking smashes into bits.
Your link says they are “likely” to decline. Well, duh. Of course they will decline at some point v
 

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The reality is NO ONE KNOWS what inflation will do. That certainly includes you and I.
Inflation has never ever happened before ever in the history of man..

What will we do
 

Tahuyaman

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Inflation has never ever happened before ever in the history of man..

What will we do

What’s your point?

Right now lumber prices are not declining. They are still extremely high. Eventually they will come down. A lot people will be financially ruined before that happens.

but I know it’s ok because we have a Democrat administration. To liberals everything is unicorns and butterflies when we Democrat administration.
 

Tahuyaman

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The reality is NO ONE KNOWS what inflation will do. That certainly includes you and I.
No. Eventually the supply chain will be restored and the markets will adjust to this wild spending and calm down. We can predict it will happen. We can’t predict when.
 
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