Issue link: http://palletcentral.uberflip.com/i/579895
22 PalletCentral • September-October 2015 palletcentral.com decline in the Euro and the Canadian dollar has lowered the delivered cost for producers in those countries to the U.S. market. Lumber prices have moved lower, especially for lumber produced in the U.S. south (Southern Yellow Pine). Update on the Federal Reser ve and Interest Rates It is still very hard to know for sure if the Federal Reserve will start hiking interest rates in September. Recent employment numbers and the higher inflation rates suggest they will. But the strength of the U.S. dollar, plus the recent devaluation of the Yuan by the Chinese, increases the odds that they could defer the hike. Even so, you should plan on interest rates moving higher through 2016. The interest rate hikes will be modest, however, since the Federal Reserve does not want to nip this recovery in the bud. Short term interest rates could move up about 1-1.5% by the end of 2016, with long term interest rates (such as mortgages) moving up less than 1%. The Bottom Line Prospects for sustained growth through 2016 still look good, but lower than discussed earlier because of international events and lower spending by the Federal Government. Growth in industrial production, a primary driver for the pallet market, will be only 3-4%, rather than the 4-5% given in earlier outlooks. On the plus side, the factors that have lowered industrial production growth are also putting downward pressure on lumber prices. PC ECONOMY Lynn is president of Strategic Economic Analysis, a compa- ny which assists business managers in thinking about the future. Although the primary focus of his firm is housing and wood products, the company stays current on overall eco- nomic activities in the USA and globally. Lynn may be reached at lmichaelis@getfea.com or phone: 206-434-8102. Growth in industrial production, a primary driver for the pallet market, will be only 3-4%, rather than the 4-5% given in earlier outlooks.