For the past few years, Paul Jannke of Forest Economic Advisors has been leading an annual webinar discussing where he sees the North American lumber market going within the next year. This year’s host, Chris Laughton from Farm Credit East, introduced Jannke as “the industry’s top economic analyst.”

One main point Jannke made is that they “no longer think there is going to be a recession,” which was discussed during last year’s webinar. He predicted that the economy will slow down toward the middle of 2024 but not enough to cause a recession. One reason the economy is predicted to slow is because of interest rates.

In 2022, we saw the “fastest and highest rise in interest rates that we’ve seen in 40-plus years” due to inflation, Jannke said. He and his team not only think that the Fed is done raising interest rates, but “most likely, from [their] forecasts, we’re going to see rates start to decline in the middle part of this year, with a little bit less likely scenario that they stay flat.”

North American lumber markets: Where are they going?

Inflation is thought to be under control at this point, but why? For one, a big component of inflation is actually housing costs, and when looking at Zillow rates, the increase in rent is climbing at a lower rate than it was in 2021-2022. During this time, the pandemic made it hard for folks to get goods to markets, causing production interruption and supply constraints. Now that we are no longer seeing supply constraints, inflation is more under control. In fact, Jannke thinks it’s going to continue to come down toward that 2% target that the Fed is aiming for and “because of that, we think the Fed is going to lower rates. So that’s a good sign for the overall economy.”

Residential improvements such as repairing, remodeling and additions are a big market for lumber products. Especially since COVID, a lot more people are working from home and adding office spaces to their houses. For those who don’t already own a home, there are not a lot of homes for sale at the moment. You would think this would be an incentive to build more homes, but because building material prices are decreasing and mortgages are increasing, builders are already making high profits. In fact, only 9.4% of current U.S. owned-occupied homes were built between 2010 and 2021.

Overall, there are “two main end-use markets for lumber and panels, those being new residential construction and additions, alterations and improvements,” Jannke said. Additionally, there are various industrial markets that use lower grades of lumber products such as making packing pallets and furniture.

Besides maintaining low interest rates, another component to avoiding a recession is having strong labor markets. Currently, “we have about one-third more jobs available today than we have people,” Jannke reported. This means that the labor market is strong and we’re likely to see some growth in 2024.

He said, “We have strong labor markets, we have good balance sheets and we have a lot of excess savings, so there’s a lot of reasons to be optimistic about where the economy is going to go.”

The main takeaways for the lumber market throughout 2024 are that capacity is expanding rapidly; exports remain weak; imports remain roughly flat; costs are elevated; interest rates are elevated but falling; and more homes need to be built to back up the inventory.

For more information on the 2024 Forest Industry Outlook, visit the events and webinars page at

by Kelsi Devolve