By Duncan Smith
Not much about the nascent Biden regime has been good.
The border is a chaotic mess. Joe Biden himself is riddled with mental deficit. His VP is straight-up incompetent and overtly political. And the economy has been a disaster.
Inflation, especially, has run rampant, and it is a direct result of terrible monetary policy.
Biden’s regime is printing money like it’s going out of style on Democrat-passed ‘stimulus’ bills that, at the same time, have contributed to a workforce deficit by paying people to stay home with overly generous unemployment benefits.
Top all of that off with a pandemic-caused global supply chain disruption, and it’s no wonder the country’s economy house is out of order.
Finally, however, we get a spot of good news, as Zero Hedge reports:
Lumber futures on Chicago Mercantile Exchange posted their largest-ever weekly loss, extending a multi-week decline as sawmill output increases and buyers hold off on purchases, according to Bloomberg.
On Friday, lumber futures fell 5.61% to $1,059.20 per thousand board feet. For the week, prices plunged 18%, the most significant decline since 1986, one year before the 1987 stock market crash.
Lumber prices have catapulted into the stratosphere in the last year, hitting renovators, home builders, buyers, and anyone else extremely hard. The National Association of Home Builders (NAHB) has noted lumber prices have added at least $36,000 to the costs of a new single-family home.
For the last several months, we have warned about the pernicious effects of soaring prices on consumers. For instance, the University of Michigan economic sentiment survey shows the number of people who say it’s a good time to purchase a house has collapsed as the price of lumber, copper, concrete, roofs, labor, land, and almost everything scream higher.
Is the decline in the price of lumber a precursor to lower prices overall or, at a minimum, lower prices for homebuilding materials?
“Activity yesterday was brisk to start, turned lethargic and ended quite subdued,” William Giguere, who buys and sells eastern spruce with mills for Sherwood Lumber in Massachusetts, wrote in a note Friday.
“There was plenty of lumber available from the mills and enough ambition to sell. Missing was the sense of urgency from buyers.”
That’s because home prices are so high right now as to be overpriced — as such, the enthusiasm for buying is way down.
Rentals, by comparison, are doing really well, however. But it’s home ownership that is part of the American dream.
Home builders love the higher prices, but they can’t last if homebuilders are to remain in business or, at least, busy.
But we’re seeing the core ingredient in homes — lumber — make its first price decline in months. That is good no matter how you look at it.
Still, as Zero Hedge adds:
In terms of output, the lumber industry is controlled by just a handful of firms, including Weyerhaeuser Co., Georgia-Pacific LLC, West Fraser Timber Co., Ltd., among others, which makes it easier for capacity to be controlled. It makes you wonder if the lumber shortage was artificially induced.
Is Inflation Going to Break the Back of Consumers and our Economy?
Will backed-up supply chains ever catch up to demand?
You have to be prepared for the coming financial reset