United States of America eSeries: Epic lumber shortage 🌳

Epic lumber shortage 🌳

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If you've got a home reno project you've been putting off, you should probably ... put it off a bit longer. Let's get into it.

By Allison Morrow

🌳 LUMBER CRUNCH

There's an acute housing shortage in America that could threaten economic growth. But the simplest solution — build more houses — has never been more complicated.

The main reason: lumber. There simply isn't enough of it to feed the red-hot housing market, and that's delaying construction of badly needed homes.

HOW WE GOT HERE

More than a year ago, sawmills shut down lumber production as Covid gripped the country. A housing slump looked imminent — historically, home buying stalls in a recession. But the 2020 slump never came. In fact, a frenzy began.

People who were able to remain employed and work remotely found themselves craving more space, either in the form of a new home or a renovation, all of which requires (you guessed it) lumber.

But the shortage has even deeper roots. Back in the mid-2000s, the housing market was badly oversupplied, and when the bubble popped, new construction cratered. Countless sawmills went out of business, leaving the industry unprepared for today's surge in demand.

HOW BAD IS IT?

Lumber is so hot it's getting stolen from construction sites.
Prices are getting passed onto the consumer. Surging lumber prices alone have pushed the price of an average new single-family home up by nearly $36,000.
Even renters are getting hit. The lumber price spike has added nearly $12,000 to the market value of an average newly built multifamily home — translating to households paying an extra $119 per month to rent a new apartment.
The home building industry is urging President Biden to temporarily remove the 9% tariff on Canadian lumber — a holdover from the Trump administration — "to help ease price volatility."

THE UPSHOT
The lumber shortage is just the latest example of how the rapid economic recovery from the pandemic is pushing supply chains to the limit. Manufacturers are desperate for workers, a global chip shortage is delaying production of cars and appliances, and a lack of tanker truck drivers has raised the specter of gas stations running on empty this summer.

QUOTE OF THE DAY

In applying a vague, standardless penalty and then referring this case to the Board to resolve, Facebook seeks to avoid its responsibilities. The Board declines Facebook's request and insists that Facebook apply and justify a defined penalty.

—Facebook Oversight Board

Former President Donald Trump might be permanently banned from Facebook. Or he might not. That's a decision Facebook tried to punt to its independent internal Oversight Board — a move that backfired spectacularly today. The board upheld Facebook's ban, ruling that company was right to suspend Trump in the immediate aftermath of the January 6 insurrection. But it tossed the final decision back to Facebook, saying the social network needs to revisit the decision within six months.

⚠️ PELOTON'S BIG TRIP-UP

Peloton is recalling about 125,000 treadmills after reports of the machines being linked to a child's death and 70 other injuries.

The recall is a reversal for Peloton, which was warned about safety concerns last month by US regulators. At the time, the Consumer Product Safety Commission recommended a recall, but Peloton, in an usual move, refused. The company apologized for that decision Wednesday.

"I want to be clear, Peloton made a mistake in our initial response to the CPSC's request," said Peloton CEO John Foley. "We should have engaged more productively with them from the outset. For that, I apologize."

THE DETAILS

The recall covers the $4,295 Tread+ as well as Peloton's cheaper Tread, which costs $2,495. Peloton pulled both machines off of its website Wednesday.

Accidents involving the treadmills, the CSPC said last month, included "multiple reports of children becoming entrapped, pinned, and pulled under" the device.

Peloton's stock tanked on Wednesday, falling more than 14%. The company, which saw demand for its stationary bikes and other home-fitness equipment surge during the pandemic, reports earnings Thursday.

🏡 NUMBER OF THE DAY

20%

Google is rethinking office returns and will now let more employees work remotely. The company expects around 20% of staff to work from home. It's a slight departure from Google's previous plan, in which all employees would have come into the office three days a week.

WHAT ELSE IS GOING ON?

🚀Jeff Bezos' Blue Origin has finally set a date for its first commercial passenger mission, July 20. It also announced that one of the first passengers will be the winner of an online auction.

🚗General Motors posted strong first-quarter earnings despite the computer chip shortage dogging the industry.

🛒Some of Europe's biggest supermarkets, including Aldi and Tesco, have threatened to stop buying agricultural products from Brazil if legislation that threatens the Amazon becomes law.