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

Airyaman

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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.
Still $49 for a sheet of OSB sheathing that I was buying for ~$8 a few years ago...

 

Airyaman

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Tumbling? Over $8 for a 2x4x8 that was just ~$2 a few years ago...

 

Tahuyaman

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Isn’t that what I said would happen about a month ago, when the conservatives here were getting hysterical about inflation?
No one was or is getting hysterical over inflation. Some just know that it’s basically a hidden tax on those who can afford it the least. Liberals don’t care about that.
 

Tahuyaman

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Tumbling? Over $8 for a 2x4x8 that was just ~$2 a few years ago...

I was going to buy ten treated 16 foot 2x12’s. I cancelled that as it was going to cost $850.00. When I saw the price I had to ask the one of the employees if it was a mistake.
 
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Visbek

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Right now lumber prices are not declining.
Retail prices are still currently high, because retailers and distributors bought a crapload of lumber at peak prices.

Lumber future prices have dropped 50% in the past 6 weeks. Production has ramped up, too -- to the point where there will probably be a glut in a few months. If you don't think that will eventually filter out to retail, then you just don't understand how markets work.

Eventually they will come down. A lot people will be financially ruined before that happens.
Riiiiiiight

but I know it’s ok because we have a Democrat administration. To liberals everything is unicorns and butterflies when we Democrat administration.
lol... This has nothing to do with who's in office. If Trump was in office, we'd have the exact same short-term inflation, the same Fed chair, and the same economists pointing out that what we're seeing is transient.

Of course, we'd have a blithering idiot and his sycophants simultaneously denying the inflation and blaming it on the Dems. So it goes.
 

Tahuyaman

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Retail prices are still currently high, because retailers and distributors bought a crapload of lumber at peak prices.

Lumber future prices have dropped 50% in the past 6 weeks. Production has ramped up, too -- to the point where there will probably be a glut in a few months. If you don't think that will eventually filter out to retail, then you just don't understand how markets work.


Riiiiiiight


lol... This has nothing to do with who's in office. If Trump was in office, we'd have the exact same short-term inflation, the same Fed chair, and the same economists pointing out that what we're seeing is transient.

Of course, we'd have a blithering idiot and his sycophants simultaneously denying the inflation and blaming it on the Dems. So it goes.
If lumber prices have dropped 50% over the last six weeks it’s not demonstrated by the prices here and I live in timber country. Production does seem to be ramping up as COVID restrictions are being lifted.

The damage done to our economy which COVID was used as the justification will take years to recover from. By the time that happens let’s hope government doesn’t use another virus to justify a repeat of this epic abuse of power



We don’t know that this period of inflation is short term, nor can define what short term is. It could be a few months or it could be a coupe of years. . We hope it’s short term

Lumber future prices aren’t driving today’s cost of lumber.
 
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trixare4kids

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Fed's Powell says high inflation temporary, will 'wane'​

Federal Reserve Chair Jerome Powell said Tuesday that he expects recent price spikes will soon subside and reduce inflation to a sustainable level

Even Powell said we are experiencing a period of high inflation. Now watch puppet Biden's lemmings say he is wrong,
 

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Fed's Powell says high inflation temporary, will 'wane'​

Federal Reserve Chair Jerome Powell said Tuesday that he expects recent price spikes will soon subside and reduce inflation to a sustainable level

Even Powell said we are experiencing a period of high inflation. Now watch puppet Biden's lemmings say he is wrong,
Yep.
 

Threegoofs

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No one was or is getting hysterical over inflation. Some just know that it’s basically a hidden tax on those who can afford it the least. Liberals don’t care about that.
Actually, it tends to hurt wealthier people, and is very helpful for those in significant debt.

But do go on. 🙄
 

Taylor

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No one was or is getting hysterical over inflation. Some just know that it’s basically a hidden tax on those who can afford it the least. Liberals don’t care about that.
Yup. Glad I'm not retired/retiring any time soon.
 
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Fed's Powell says high inflation temporary, will 'wane'​

Federal Reserve Chair Jerome Powell said Tuesday that he expects recent price spikes will soon subside and reduce inflation to a sustainable level

Even Powell said we are experiencing a period of high inflation. Now watch puppet Biden's lemmings say he is wrong,
No, he didn't. The article writer said that. If you actually read the article, you would see that Powell was specifically referring to recent price spikes in certain goods, which is most definitely not the same thing as "high inflation". In fact, he says the exact opposite as to what you're claiming he said lmao:

Most of the price gains have occurred in categories such as used cars, airplane tickets, and hotel rooms, Powell said, where demand has soared as the economy has quickly reopened, catching many companies flat-footed.

“Those are things that we would look to, to stop going up and ultimately to start to decline as these situations resolve themselves,” Powell said. “They don’t speak to a broadly tight economy — the kind of thing that has led to high inflation over time.”
 

jpn

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Your link says they are “likely” to decline. Well, duh. Of course they will decline at some point v
Yeah. And inflation will doubtless become a problem at some point in the future as well. Duh.

So the real question is what do we do now? The Fed's answer is no change at the present time. What's yours?
 

Airyaman

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Anecdotes. The trouble with anecdotes is that people see what they want to see, remember what they want to remember.

Go with data instead:
https://markets.businessinsider.com/commodities/lumber-price

View attachment 67339477
Anecdotes? I'm showing you the price the consumer pays. Want me to find more "anecdotes" for you?

But even your chart shows that while lumber is going back down, it is just down to early 2021 levels, which is still very high. Let me know when we get back to pre-pandemic level pricing.
 

Visbek

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If lumber prices have dropped 50% over the last six weeks it’s not demonstrated by the prices here and I live in timber country.
Okay, again... retail prices are high, because the retailers bought a ton of lumber at high prices.

If Home Depot buys 1,000 board feet at $1200, do you think they can just sell it at $900/1k board feet? Nope, not without taking a loss. So, it's going to take time to sell off what they bought at high prices.

The damage done to our economy which COVID was used as the justification will take years to recover from. By the time that happens let’s hope government doesn’t use another virus to justify a repeat of this epic abuse of power
:rolleyes:

There was no "epic abuse of power." Government policies didn't cause the prices of lumber to soar. No one in government benefits from an increase in commodity prices. Good grief.

We don’t know that this period of inflation is short term, nor can define what short term is. It could be a few months or it could be a coupe of years. . We hope it’s short term
We do know that it's going to be short term, because we do know that it's a result of problems with supply chains, caused by the pandemic, which are gradually working out. This is the same thing that happened in 2008.

And again, Powell was pretty clear that we're only looking at a few more months of price issues.

We also know that the Fed will not hesitate much to take action if inflation starts to rise.
 

jpn

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Let me know when we get back to pre-pandemic level pricing.
Why? So you can explain how the national prices reflected in published data isn't the same as what you find in your local mom and pop store and therefore you're right and everyone else, including the Federal Reserve is wrong?

Sure, what could be more fun?
 

jpn

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Okay, again... retail prices are high, because the retailers bought a ton of lumber at high prices.
It's hard to believe they're really this confused.

They play into the Republican strategy to divert attention from successful Democratic policies.

America Is Driving the Global Economy.​

The United States, with its aggressive pandemic aid measures and rapid vaccine rollout, is propelling the world economy, acting as a source of demand in all corners of the globe.​
The American government has been spending billions, creating booming demand in the United States. As new trade data shows, though, a meaningful share of this money is leaking overseas and going toward imported goods, in what economists call “fiscal leakage.”​
 

Airyaman

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Why? So you can explain how the national prices reflected in published data isn't the same as what you find in your local mom and pop store and therefore you're right and everyone else, including the Federal Reserve is wrong?

Sure, what could be more fun?
Never realized Home Depot, a national company, was a mom and pop shop.
 

Visbek

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It's hard to believe they're really this confused.
It's not that hard. Even when retail prices go down, they'll likely continue to complain about inflation. 🤷‍♂️
 

jpn

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Never realized Home Depot, a national company, was a mom and pop shop.
You devote so much energy to not realizing what's right in front of you.
 

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No, food and fuel prices will continue to skyrocket as part of the massive favors Biden is doing for Russia and China.

The goal domestically is to destroy the American middle merchant class - leaving 90% of Americans as beggars to the government, 9.9% working for government or for companies in business with government, and 98% of wealth will be in the hands of the already richest and most powerful corporations and people on earth - that are to control all information outlets, all government activities, reducing American industry to merely being retail outlets for China.

We are living the fall of the United States. The baby boomers will have witnessed both the USA's greatest boom years - post WW2 - and the end of the USA as the dominate world power - happening now.
 
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