Fed chair and other economists point to falling lumber prices as evidence that inflation isn't a big threat to the economy

Lumber prices skyrocketed over the past year, with futures exceeding $1,600 per thousand board feet in early May. "But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down," Matt Phillips reports for The New York Times. Lumber futures "are down more than 45 percent from their peak, slipping below $1,000 for the first time in months. That’s still high — between 2009 and 2019, prices averaged less than $400 per thousand board feet — but the sell-off has been gaining momentum over the last few weeks. The price has fallen in 11 of the last 12 trading sessions, including a 0.5 percent drop to settle at $900.80 on Friday."

Federal Reserve Chair Jerome Powell and other economists say the lumber market illustrates why they're not worried about sustained price increases for other goods such as cars and groceries. Jan Hatzius, chief economist at Goldman Sachs, told Phillips: "Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons."

The lumber market's cooling off "offers lessons that are likely to guide policymakers as they run the economy at full throttle, accepting what they regard as a temporary bout of inflation in hopes of generating more than 10 million new jobs," David Lynch reports for The Washington Post. "Lumber’s wild gyrations show that today’s hiring troubles and shipping delays reflect short-term reopening kinks, not a lasting shift that will push prices higher and higher."