Issue link: http://palletcentral.uberflip.com/i/990149
28 PalletCentral • May-June 2018 palletcentral.com month, the lowest level in 18 years. Job openings are also hard to fill. Currently job openings exceed 6 million jobs, 20% above previous peaks in 2001 and 2007. The biggest problem facing small business today is "labor quality"—that is a euphemism for hard to get good workers at the wages being offered. In a Wells Fargo Small Business survey, two of the business manager's priorities over the last year were boosting wages (employee retention) and hiring new workers. To show how bad things are getting, there was a recent article in the Wall Street Journal about local governments providing economic incentives to get people to move to their town. Although this is great news for workers and for outlook of consumer spending, this is creating a challenge for businesses that wish to expand output. The lack of labor supply is mentioned by builders as to one reason they have not been able to build houses at a faster rate. The forest products industry is not able to expand production as rapidly as it might like to. Regarding economic growth, the situation will remain very challenging and wages will accelerate further over the next two years. This means inflation will move higher as well. Recently the inflation rate tracked by the Federal Reserve hit their target rate of 2%. As inflation moves higher, the Federal Reserve may be forced to move rates higher and faster than currently planned. The Bottom Line Lumber prices should move lower into next year. Demand growth for pallets should be positive as well. However the cost of labor and loans will move higher through 2019. 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.