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Should Joe Biden worry about the rise in timber prices?

WASHINGTON – If a tree falls in a Canadian forest and logging has to take 16 hours to pull it out, does that crush the US president’s economic program?

This incredible question may be on the minds of some in Washington, as soaring prices for used corn seed timber have emerged as alarming signs of the post-pandemic economic boom, with President Joe Biden and Democrats in Congress hoping to keep them in power. .

Consumer demand is rising as some restrictions on Covid-19 fall. But the supply chain has had trouble keeping pace, pushing prices higher and leading to shortages.

Government data from April show disappointing job growth and an unexpected jump in consumer prices. The main raw materials such as copper and iron ore are at all times; gas prices are over $ 3 a gallon, and analysts warn of gas shortages even before the last long days of shutting down a key pipeline; and the shortage of computer chips forced manufacturers to stop producing cars, household appliances and more.

Put it all together, and some economists, such as Clinton̵

7;s Treasury Secretary Larry Summers, are worried that the country is about to experience its first real bout of rapid inflation since the 1970s, when rising costs undercut wages. and people’s savings – and helped bring down President Jimmy Carter.

“Inflation is the kryptonite of American politics,” said Democrat Democrat Chris Coffinis. “It doesn’t matter which party you’re in. It destroys you.”

So far, price increases have been isolated, especially for certain industries. This month, timber reached a record $ 1,686 per thousand boards after rising 406 percent from $ 333 per thousand boards traded at the same time a year ago and 438 percent of its price five years ago.

Just as the state emerges from the pandemic’s forests, it is depleting timber. Prices have tripled and some builders have trouble finding them. Poor plywood is so valuable that workers keep it locked up after multiple thefts.

In the forests of British Columbia, which supplies much of the US two-by-four, logging Chase Barber feeds a seemingly insatiable demand by driving until 4pm to pick up logs he wouldn’t even bother with when prices were lower.

“I can’t find a trailer for selling wood anywhere. I have two trucks that I want to tow, and I can’t find a trailer anywhere. You talk to the manufacturer and they say it’s a year or more and a half wait,” he said. “And you can’t find truck drivers. Anyone who can and wants to drive a truck is already driving a truck.”

A customer loads timber at a home depot store in Pleasanton, California, on February 22nd.David Paul Morris / Bloomberg via Getty Images file

Barber, who has become something of a lumber influencer with more than 300,000 followers on TikTok, has noticed a growing interest in the industry, with more and more people asking him how to invade, although he warns that timber unpredictability is not “It really flows to the workers.

At the other end of the supply chain, builders had to deal with rising costs and unreliable supplies, which they say now add up to $ 36,000 to the price of a new home.

Housing prices have already risen due to long-standing housing shortages – there are now fewer homes for sale than there have been in decades – and on top of timber things like garage doors, insulation and windows have also risen or been included weekly order as manufacturers catch up with thriving demand.

“The fact is that if this continues, you will see the housing sector slow down and stop,” said Jerry Howard, chief executive of the National Association of Home Builders, who said housing is often a leading indicator of economic health. “This problem with the cost of timber and other building materials is something like creating another potentially perfect storm for homes that would lead us into a recession.”

Lumber’s unprecedented jump in prices could be halted by a number of industry-specific problems.

Construction has never really recovered since the Great Recession more than a decade ago, so the supply chain has reduced its capacity. Add beetle infestation in British Columbia, sales to European Chinese producers and tariffs imposed by former President Donald Trump on some Canadian wood.

Then, at the start of the pandemic, timber producers reduced production, which turned out to be a misconception that construction would stop with the rest of the economy. Instead, home-based consumers continued to drink households, while others decided to move to new homes as they were free to work remotely.

Jared Feltman assembles wood on a forklift at Adams Lumber Co. in Centennial, Colorado, on May 4th.Hyoung Chang / Denver Post via Getty Images file

“Covid added extra fuel to an existing hell,” said Tom Rafferty, a commodity trader at Millbrook Lumber Inc. outside of Boston. “It has nothing to do with inflation.”

At a congressional hearing this month, Trade Minister Gina Raimondo said she would make timber prices a top priority.

Builders and others want Biden to remove Trump’s tariff on Canadian timber, which has been reduced from 20 percent to 9 percent in the last months of his presidency.

“The reality is that record high timber prices put the American dream of home ownership out of reach of hundreds of thousands of potential home buyers,” said Sen. Jerry Moran, R-Kan., On the Senate floor last week. “American home buyers, not Canadian lumber producers, end up paying the costs.”

For now, most economists, including those in the Federal Reserve, believe that the price increase is only a temporary whim of the economy to idle.

Like the Big Shortage of Toilet Paper in 2020, they hope it will come and go without really meaning anything bigger. But no one knows for sure, and so many of the economic impacts of Covid-19 are unpredictable.

“We have had a very unusual blow to our economy,” Finance Minister Janet Yellen told White House reporters this month. “Starting the economy again, trying to get it back on track after a pandemic where there are very bottlenecks in supply, will be, I think, an unequal process.”

Biden is counting on a stable economic recovery to keep his popularity and program alive as he tries to push through his huge infrastructure package, which will be paid for in part by tax increases. Both Democrats in both houses of Congress hope the strong economy will help them stick to their narrow majorities in next year’s election, overcoming the historic trend in which the presidential party usually loses seats in the first term.

But Republicans have already tried to make hay out of rising spending to argue against Biden’s infrastructure plan.

“You are watching the cost of food rising. You are watching the cost of housing, the cost of timber. There is inflation everywhere,” minority leader Kevin McCarthy, R-California, said after meeting with Biden at the White House on Wednesday. “So raising taxes would be the biggest mistake you could make.”

Meanwhile, some, like Melissa Miller, 38, of Saginaw, Michigan, are already feeling overwhelmed at the grocery store.

“Food prices will kill us,” she said. “Do or die.”

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