Economic Outlook - February 2009

The outlook for the U.S. economy continues to dim. Slack final demand is feeding a downturn in production and a rise in unemployment, which creates a further falloff in demand. A stronger dollar is impinging on new export orders for forest products. The inventory of new homes is shrinking, but the overhang of existing homes is likely to continue to swell as a growing number of job cuts contribute to a rise in mortgage defaults. Oil prices weakened further in December in concert with the ongoing recession, but geopolitical tensions and supply cutbacks threaten to drive prices higher.

View the chart below for a closer look at the performance of the wood and paper products industries in November 2008, the last month for which details are available.