David Chertudi, DNR Lead Economist
U.S. Economy and Housing Market. While a harsh winter and business inventory adjustments caused the U.S. economy to shrink by 1.0 percent in the first quarter of 2014, most analysts expect growth to rally for the remainder of the year. Year-over-year GDP growth remains modest at just above two percent when averaged over the last four quarters ending in March. In October 2009 the unemployment rate peaked at 10.0%, but has slowly fallen to 6.3% as of April 2014. The housing market continues to show positive signs with new housing starts for 2013 up 18% over 2012 and 52% over 2011. Average U.S. housing prices have been trending upward since January of 2012. However, the U.S. economy still faces significant challenges – unemployment remains high and there are significant difficulties for younger graduates and workers, as well as the long term unemployed. While the financial and economic crises in Europe are improving, several European countries remain in recession and the crisis in Ukraine has introduced significant political and economic uncertainty. China’s economy continues to show signs of underlying problems. Finally, the U.S. government still has not implemented a coherent, growth-driven economic policy – which is unlikely to happen in the highly politicized environment of an election year.
Lumber and Log Prices. Lumber and log prices were up in 2013 and continue to improve. While it varied widely, Random Lengths’ Coast Dry Random and Stud composite lumber price averaged $370/mbf in 2013 – up 20% from the 2012 average of $309/mbf – and has averaged $384/mbf to date in 2014. Pacific Northwest log prices also moved up sharply after being fairly flat for 2011 and most of 2012, with the price for all grades of Doug-fir averaging $616 in April.