Hardwood sales rise

By Ernest J. Stebbins Executive Manager National Hardwood Lumber Association

A LTHOUGH my crystal ball is no clearer than any- lrl one else's in predicting what lies ahead for the hard- Fl rn wnat aneao narowood lumber market in 1989, I remain mildly optimistic judging from my impressions at the recent NHLA convention in New Orleans, La. Everyone is very much aware that the U.S. economy has been expanding for the past 60 months. It is totally out of step with the historic trend of a cyclical economy, which enters a recession usually in cycles of three to three and one-half years. Because demand for hardwood lumber, both at the industrial level for pallets and packaging and at the consumer level in fine furniture, flooring and architectural millwork, depends entirely on the general health of the economy. When the economy is good and the work force fully employed, demand for all products increases and the industrial hardwood market gets hot. At the same time, when everyone is employed, consumer discretionary income goes up and furniture purchases and remodeling projects eat up a lot of hardwood lumber.

During the NHLA convention we heard a knowledgeable economist, Sarah Meyerrose of First Tennessee Bank, Memphis, Tn., point out that many of the economic indicators point to a slow-down in the economy. However, Ms. Meyerrose herself noted that one year ago at the NHLA convention in Washington, D.C., following the stock market crash of Black Monday, Senator lf you read the weekly price newsletters that are pub-

Sam Nunn in addressing the NIILA general session made much the same prediction: that the year ahead offered a poor prospect for the U.S. economy. Senator Nunn could not have been more off the mark. and Ms. Meyerrose's qualilied her predictions on that basis. l)uring the past three months the index of leading economic indicators has first fallen. then risen slightly. and in the most recent months recorded, fallen slightly again. This unusual behavior is confounding economists and is another characteristic of this long drawn-out economic expansion. The (iross National Product is still growing, although growing at a slightly lower rate in the last quarter. So while the indicators out there are that the expansion of the LJ.S. economy is slowing, the majority of economists believe lhat a recession is unlikely in 1989. Add to this prediction a factor important to the hardwood market. the significant increase in hardwood exports during the past two years. The hardwood lumber market is no longer a domestic market, but entirely a world market. Perhaps as much as one billion dollars in sales will go overseas in 1988, up from approximately $750 million in 1987 - another record. This overseas market can cushion for a time any reduction in demand in the domestic market.