Tuesday, September 9, 2025

Plunging lumber prices pose warning sign for U.S. economy - WSJ


Following up, as promised. Here is a short list of crucial topics from today's Google News:


Inflation, still a problem:

 

Jobs, largely a result of economic uncertainty. It didn't have to happen:


Tariffs are developing into a problem, on schedule:

 

Trump Dissing the Fed, a behavioral problem making things worse:


And evidence that the Trump Recession is going to be a Depression. This is new. Now I'm worried:

 

Remember, inflation had not settled down to the 2 percent target as of Trump's second inauguration in January of this year. Inflation was still a problem, then. On top of that inflation, Trump has added the tariffs -- tariffs which  increase prices more, and slow the economy besides. And now, despite the inflation, despite the tariffs, despite all the rising prices, lumber prices are "plunging". It is a "warning sign" indeed. It warns of a most severe slowing of the economy.

Economic stability is a good thing. Prices rising a little is a little troubling. Prices rising more because someone decided to put tariffs on everything is more troubling -- and worrisome, because the tariff is not normal policy. Many of Trump's policies and decisions are unusual and worrisome. The economy does not respond well to abnormal and worrisome behavior.

The most important point I want to make is that optimists may think Musk was right when he said his work at DOGE would "necessarily involve some temporary hardship."

Optimists may agree with the anonymous Twitter user who said

“If Trump succeeds in forcing through mass deportations, combined with Elon hacking away at the government, firing people and reducing the deficit - there will be an initial severe overreaction in the economy…Market will tumble. But when the storm passes and everyone realizes we are on sounder footing, there will be a rapid recovery to a healthier, sustainable economy.”

Severe overreaction, the anonymous user says. But severe is an understatement. And overreaction is an incorrect assessment; it will not be an over-reaction. Finally, the anonymous user's references to sounder footing, rapid recovery, and a healthier, sustainable economy are baseless, overly optimistic assessments.

Such optimism about the economy, these days, is a dangerous thing. If there are signs that our economy is moving into recession -- or worse, into depression -- our only sane move is to reverse course immediately and rescue ourselves from the slump before it is too late. The Trump administration will say they warned us about "temporary hardship". They will expect us to give their policy time to work. But we are doing that now. 

We  must not give the economy time to get worse and worse again.

The problem that must be resolved is the growth of finance. The solution is to recognize that the growth of finance increases financial cost, that debt is a mechanism which moves income from borrowers to lenders, and that financial cost pressure drives the long-term decline of our economy. Once these principles are well understood, economic policy must be changed to help people get out of debt -- not to encourage people to go into debt and remain in debt, as existing policy has done for the past 75 years.

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