Over Reaction To Predicted Housing SIump?

by Pete Niebling Western Manager North American Wholesale Lbr. Assn

IUMBER- L MEN who have been wait- ing for the "other shoe to drop" in housing activity have finally heard the "thump." Short term interest rates which affect mortgage money for loans have finally begun to do what rising housing costs and high mortgage rates could not.

Reaction to this long expected housing downturn has some prognosticators predicting Armaged- don. Current outlooks for 1980 grow more pessimistic each day.

Is this an over-reaction?

The housing slumps of 1969-70 and 1974-75 adversely affected the forest products industry. So will the 1980 downturn.

Nevertheless. the environment in 1980 for the forest products industry is quite different from the previous two downturns.

The shortage of timber stumpage for the U.S. producer over the past few years gives him a new "set of numbers" to work with. There is every reason to believe that he will have to curtail production to whatever demand is. The old indus- try cliche of upping production when the market declines is simply no longer viable.

At the same time, both the wholesaler and retail dealer have changed their buying habits since the last housing slump. Seasonal inventory buildup is a thing of the past, and today there is no inven-