Dr. George Cline Smith Profects 1975 Lumber Use Before Economic Council

Dr. George Cline Smith, senior partner of McKay-Shields, New York, and a noted economist in the construction field, told the Economic Council of the Lumber Industry meeting January I0 at Palm Springs, California, that a maximum potential lumber market oI 64.6 billion board feet could develop in 1975 based on current use rates and his total construction projection of $100 billion for 1975.

The preliminary estimates for 1962 indicate a total lumber consumption in the U.S. of 36.6 billion board feet. Dr. Smith said the 64.6 billion board feet was an o'outside" figure, unlikely to be achieved, but stated that it did show the size of the potential market for which lumber would be competing.

Retained by NLMA as an economic advisor to the lumber industry, Dr. Smith provided the Economic Council with a thorough analysis of population projections through 1975 and related this growth to the lumber economy.

Taking into account the gradual decline in per capita consumption of lumber over the past several decades, he nevertheless predicted a potential national consumption of 40 billion board feet in 1967 even if per capita consumption declined to as little as I70 board feet.

Analyzing the population growth of the nation to a gain of 47 million above present levels, he indicated that housing requirements would then provide a residential market of $32 billion. If the 1960 ratio of apartment starts to single-family units held at the same level in 1975, Dr. Smith said that lumber's share would total 20.2 billion board feet. If, however, apartments totaled 3O/o of the residential market bv that time. as he expects, lumber in residential construction would total a billion feet less.

HIGH I.EVET OF STAGNATTON

Dr. Smith opened his remarls before.the lumbermen by declaring that the 1963 short-range outlook was confusing since the economy is currently at "a high level of stagnation" and it is difficult to predict what will make it move.

'olf we go on at the present pace and don't get new life into the economy"" he warned, "we may slide off."

Commenting on the short-range horizon, he indicated that the possibility of a tax cut may be the force to make the economy begin a gradual rise. He anticipated that a tax cut may be forthcoming by late summer but that it will be smaller than hoped and will offer little economic impetus this year.

Turning to construction projections he predicted tlat. private residential, construction would be off slightly in 1963 with public construction up and school construction Ieveling ofi so that the 1963 totals in construction would be about the same as in t962.

r963 CONSIRUCTION SucHnY OFF

Pinpointing the overall construction industry figure for 1963 as l/o ofr rhe 1962 pace, he specified the following changes in the coming year: Residential, down 3.2Vo; Non-residential, down 3.SVo; Industrial, down 3.6/o; Commercial, down 4/o; and Other, down,2.9/e.

Emphasizing that the construction industry had apparently set a new record every year since 1947, except for 1960, he pointed out that a conversion of construction statistics in the transfer of data collection and reporting from the Bureau of Labor Statistics to the Census Bureau accounted for much of the apparent sustained rise in the past 5 years.

"The Census Bureau, when it agsumed this responsibility, considered that BLS had missed about 150,000 units and added them in 1959," he said. ooThis accounted for the apparent jump in 1959, but, if this statistical change were taken out, it would be clear that the construction industry had remained level since 1955 in real terms" although the dollar figures rose because of inflated costs."

Reviewing the development of the construction industry and its supplies since the (Continued on Page 72)