Politics temper lumber output

By H.A. Roberts Executive Vice President Western Wood Products Association Portland, Or.

+HROUGH

I the years, those of us who have forecasted supply and demand for Western lumber could count on almost sure-fired success. As the economy went, homebuilding and Western lumber were sure to follow. If the economy suffered and housing fell, we could count on federal pump-priming with housing subsidies and the like. Demand was always just around the corner. At times, that demand would even stretch our ability to supply. Today, those using the typical past as a roadmap find themselves miles off course. Today, the roadmap is called supply-side economics, and there aren't many who know where we are heading.

More critical, it's also a new chart for those in the nation's capitol and there is a question now as to when relief may be expected. At the time of this writing, we are getting mixed signs from Washington in regard to monetary policies and fiscal plan-

Story at a Glance

Total U.S. lumber consump. tion up 7o/o naxlyear. fewer single family starts . . . more mobilo homes Western fumber shipments up 7o/o in '82... Canadian imports 30o/o of total consumption.

ning. And, the signs are resulting in disparate forecasts.

Witness the housing start calls for 1982. The bears are calling for 1.3 million starts next year. On the other hand, some of the prestigious forecasters claim 1.6 to 1.7 million units will be built in 1982.

It would be a most pleasant task to predict 1.6 or 1.7 million units, but those numbers are unrealistic. Even our forecast of 1.4 million units for 1982 is based on some assumptionssome might even call them hopeswhich stand a good chance of becoming reality.

One of those assumptions is that the industrial sector will pull in its horns on short-term borrowing. This should help relieve pressure on interest rates. Recent actions by the Reagan Administration and Congress point to some scaled back spending for the military as well as additional cuts in social programs. We hope these moves will lead to less of a deficit and, in turn, a slackening in demand for money by the federal government. This, too, should help relieve pressure on interest rates.

There is also a political assumption we're making. That is, the Federal Reserve Board will be reluctant to push the nation into a full recession by continuing indefinitely tight monetary policy. Recently, we've seen a loosening of the reins. We hope that after prudent judgments and discussion, credit will be loosened further.

It is likely that less than 1.2 million units will be constructed in 1981. That means only 10.7 billion board feet of lumber will be consumed in residential construction this year, as compared to 16 billion in a normal year.

In 1981, residential construction will use 34s/o of U.S. total lumber consumption. Two years ago, 40s/o of U.S. consumption was used, and there hve been years as high as 44s/0. The slackened economy has caused other use-categories to be revised downward.

Specifically, l98l should end with other new construction accounting for 5.65 billion b.f., repair and remodeling at 7.75 billion b.f., materials handling 3.9 billion b.f. and all other uses three billion b.f. Exports should come in at 1.8 billion b.f.

Looking at 1982, we expect total U.S. lumber consumption to be up seven percent in 1982, a total of33.2 billion b.f. That's 2.2 billion more feet than will be used in 1981. WWPA sees 1.7 billion of that in-

(Please turn to page 41)