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Industry At a Glance: From Forest2Market’s September 2010 Economic Outlook
Suz-Anne Kinney : October 4, 2010
Economic forecasters are gradually migrating into either of two camps when it comes to the question of what is in store for the U.S. economy. On one side is the “ slow-growth” camp, whose views were summed up in a Bloomberg.com article that said “the sectors of the economy that traditionally drive it into recession are already so depressed it’s difficult to see them getting a lot worse.” This camp also appeals to the historical rarity of back-to-back recessions when discounting the likelihood of another contraction. “[The bad data] doesn’t rule out a recession,” said Ethan Harris, head of developed markets economics research at Bank of America Merrill Lynch Global Research in New York. “It just makes it less likely than otherwise.”
Then there are the “double-dippers.” Being less upbeat, the double-dip camp is admittedly smaller than its slow-growth counterpart, but its ranks have been swelling of late. This camp views the slowdown in growth of gross domestic product (GDP) since 4Q2009 – and especially the downward revision to 2Q2010 – as presaging future hurdles the economy must clear before more robust growth can occur.
In the final analysis, the forest products industry will be affected similarly whether the U.S. economy contracts or just ekes out growth. And if the economy does shrink again, it will make little sense to argue about whether that outcome constitutes a completely new recession or is just a continuation of the one the world has been dealing with.
Manufacturing and service industry output
Paper manufacturing was one of the industries exhibiting growth in August, but all characteristics of Wood Products performance remained unchanged for a second month (Table 1).
Construction and Real Estate were among the top three service sector industries reporting expansion; Agriculture, Forestry, Fishing & Hunting led the list of contracting industries. Survey respondent comments ranged from “Continuing to show signs of positive growth” in Construction to “Business is pretty stagnant; starting to see price erosion in our selling markets” in Ag & Forestry.
Input prices rose at a moderate pace for manufacturing industries and jumped significantly for the service sector. Relevant forest products-sector commodities whose prices increased in August included: caustic soda, coated groundwood (also listed as in short supply), diesel fuel and gasoline. No relevant commodities were down in price.
Table 1. Performance overview for Forest-Related Industries.
Data source: Institute for Supply Management
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