Tree Dollar SignFebruary 2014 DNR Economic and Revenue Forecast Highlights

U.S. Economy and Housing Market. The U.S. economy is still improving in fits and starts. In October 2009, the unemployment rate peaked at 10 percent, dropping back to 6.7 percent as of December, while the unemployment rate for recent undergraduates continues to push 13 percent. Year-over-year Gross Domestic Product (GDP) growth remains modest at below two percent, averaged over the last four quarters ending in December. The recent government shutdown will suppress GDP in this and future quarters. The housing market continues to show positive signs: new housing starts in the 2013 averaged 928,000 (up 18 percent over 2012 and 52 percent over 2011) and average U.S. housing prices have increased in each of the last 22 months through November. The U.S. economy still faces significant challenges. There are still too many unemployed workers, though some have reentered the workforce after having left; the financial and economic crises in Europe are improving, but several European countries remain in recession; China’s economy has slowed; and the U.S. government still has not implemented a coherent, growth-driven economic policy.

Lumber and Log Prices. Lumber and log prices were up in 2013. While it varied widely, Random Lengths’ Coast Dry Random and Stud composite lumber price averaged $370/mbf—up 20 percent from the 2012 average of $309/mbf. Pacific Northwest log prices have also moved up sharply after being fairly flat for 2011 and most of 2012. The price for a ‘typical’ DNR log delivered to the mill climbed dramatically to a nominal high of $587/mbf in April, the highest price since 2000. The log price then fell a bit before climbing back to $610/mbf in December, to average $564/mbf for the year—up 18 percent from 2012’s average of $480/mbf.