Continued growth in '88

By Gary D. Schlaeger Vice President Forest Products Burlington Northern Railroad

I r ls HARD to conceive a more I dramatic economic event than "Black Monday," the Oct. l9th record drop in the U.S. stock market. Fortunately, what happens on Wall Street does- n't necessarilyrule the economy. The stock market is an imperfect forecaster of economic activity. In the words of WWL& nsls( economist Paul Samuelson. "Wall Street has predicted nine of the last frve recessions."

After effects of the stock market

Mor6teirle

by WESTERN TURNINGS

decline may be slower spending by the consumer and a reduction in capital expenditure programs, but lower interest rates will help restore confidence as 1988 unfolds.

Story at a Glance

Economy will grow but at a slower rate... 1.5 million housing starts. lumber consumption off 34Yo.. higher prices for products and transportation.

will remain soft in 1988. Lumber consumption is assumed to decline 3-40/o to about 48 billion bd. ft. in 1988.

The forest products industry has enjoyed a record year in 1987, with both lumber and panel products reaching all-time demand levels. This has been reflected in increased product prices and industry earnings. Expectation for continued high demand in 1988 will undoubtedly continue the upward pressure on industry prices, as well as transportation prices, to meet the increased equipment and service demand.

Big W Backs Olympics On TV

Weyerhaeuser Co. will be a major TV sponsor of the 1988 Winter Olympic Games in Alberta, Canada.

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Our economy has its problems with budget deficits and imbalance of trade payments, but it also has shown remarkable strength for almost five years. We believe the economy is sound and, since 1988 is an election year, it will continue to srow but at a slower rate than in TggZ. fhe risk of a recession will increase sharply in 1989 as a weaker U.S. dollar causes a rise in prices and inflation and federal spending cuts enforced by the Gramm-Rudman bill further reduce a stimulus by government spending.

U.S. housing starts in 1987 will be about 1.65 million units and are assumed to decline about l0o/o to near 1.5 million units in 1988. Mortgage interest rates are expected to average 50 to 100 basis points above the 1987 level as fears ofinflation increase. Also, as the "baby boom" generation gets older, family formations are slowing and shelter demand is reduced accordingly.

Single family construction, which has been 1987's bright spot because of trade-up demand, will bear most of the industry's decline. Regionally, all sectors of the U.S. will show less new home construction with the Northeast and California markets being the most active, followed by the Midwest and South. Repair and remodeling spending again will be strong in 1988 as homeowners repair and expand instead of moving. With vacancy rates averaging 60/o for industrial buildings and 160/o for downtown oflice space, industrial, commercial and oflice construction

A series of 30 second commercials is being prepared for viewing on ABC Television during the games, Feb. 13-28. An estimated audience of 25-30 million Americans will see the commercials at least 28 times.

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