Issue link: http://palletcentral.uberflip.com/i/1141207
22 PalletCentral • May-June 2019 palletcentral.com LUMBER business investment. The other is slower growth in Europe and China, so offshore investment funds are moving into the U.S. capital market. Finally, the bond investor is getting optimistic about the underlying inflation rate and expects long- term interest rates to stay below 3%. Because the yield curve is inverted it might be time to be concerned about a recession in 2020 or 2021, just like the economist group. There is nothing evident in the overall economy to suggest that a recession will occur in the next 12 months. However, the current interest rates situation is a concern. I would suggest you start contingency planning for a possible recession in the next few years. Quick Update on Lumber Prices In the January/February PalletCentral article on the lumber price outlook, I provided an outlook for lumber prices over the next few years. The outlook depended largely on the housing outlook, since the supply growth in the South of lumber capacity is underway and will not slowdown. If housing starts remain near 1.2 million, then the dramatic capacity growth in the U.S. South would keep softwood lumber prices flat or down for the next few years. In April, housing starts were still near 1.2 million units. Lumber prices drifted lower in May, which is seasonally a pretty good month. Green Douglas Fir 2x4 (key line indicator for western lumber) remains below $300/mbf. The Southern Yellow Pine 2x4 plummeted and hit $340/mbf in the latest Random Lengths Report— which is 42% below last year's peak. Good news for a pallet producer. PC