Issue link: http://palletcentral.uberflip.com/i/946815
32 PalletCentral • January-February 2018 palletcentral.com Second, U.S. budget deficit is set to rise, rather than fall over the next 3 years because of the Trump Tax Reform. The deficit could even be higher than forecast, when additional money is provided for disaster relief, infrastructure repair and more defense spending. Rising interest rates could become the trigger for another recession. The higher rates will dampen the boom in the stock market and nip the housing recovery as affordability declines. Higher corporate bond rates will also slow business investment. The forecast for rates will not necessarily trigger a recession, but if the Fed gets even more aggressive then a recession is likely by 2020. Bottom Line: Great Year Ahead In summary, 2018 is shaping up to be a great year for the pallet industry. Demand growth should be very strong. The focus will shift to managing costs, such as wage rates, credit, energy and material inputs. For instance, one material input shot up in 2017: softwood lumber prices. Western lumber prices (Douglas Fir and Spruce) rose about $100/mbf or about 30%. Southern lumber prices lagged behind. This was not due to strong demand, but rather the duty imposed on lumber imports from Canada. After consideration of the issues involved, the U.S. International Trade Commission sided with the U.S. coalition of lumber producers and imposed a combined 20% duty for a countervailing (CVD) and anti-dumping (AD) on imported lumber products from Canada. PC ECONOMY Lynn Michaelis is President of Strategic Economic Analysis, a company 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 economic activities in the USA and globally. Lynn may be reached at lmichaelis@getfea.com or 206-434-8102. 2018 is shaping up to be a great year for the pallet industry. Demand growth should be very strong. The focus will shift to managing costs, such as wage rates, credit, energy and material inputs.