Issue link: http://palletcentral.uberflip.com/i/1332064
22 PalletCentral • January-February 2021 palletcentral.com Lynn Michaelis is president of Strategic Economic Analysis, a company which assist business managers in thinking about the future. He was previously a vice president and chief economist for the Weyerhaeuser Company. Lynn may be reached at stratecon@icloud.com or 206-434-8102. secure quickly. And, the restrictions on train cars getting across the Canadian border were another supply problem. As a result, demand pushed above effective capacity limits and prices shot skyward. Lumber prices more than doubled from the low point in April, to the peak levels seen in September. Lumber prices are trending lower and should get back in line with production costs in 2021 (Figure 4). Still in Uncharted Waters, but Some Good News Although the overall rate of growth in early 2021 will still be adversely affected by the efforts to contain the spread of the virus, the vaccine is likely to get the problem under control by mid-year. Overall economic activity should improve dramatically in the second half of 2021 with growth rates above 4 percent. Given the amount of liquidity injected into the financial system, plus the large wealth gains for homeowners, consumer spending should move up for both goods and services. Two factors need to be monitored in 2021, besides overall growth. First, there will be a new administration under President-Elect Joe Biden and that will change a variety of regulatory and policy priorities. Second, the Fed will have to come to terms with the massive purchase of federal debt in 2020 and early 2021. Inflationary pressures will become evident in late 2021 because of the excess money supply growth. Rising inflation will lead to higher interest rates and wage pressures in 2022 and beyond.