For the past few months the term has been mentioned in a hushed tone or whisper. Anyone carrying on a conversation and gets to the point where he or she is about to actually say it, can't help but hesitate, stammer, and then follow with an apology for even bringing the subject up. The mere mention of it brings furrowed eyebrows, cautioning glances, even grimaces. Some people simply refuse to mention it at all for fear of putting a hex on the entire industry for an extended period of time. What am I talking about? The Recovery.
By a number of economic indicators, a recovery of some sort is here and is slowly gaining momentum. According to the World Economic and Social Survey, which is the United Nations' annual analysis of current developments in the world economy, the report expects world GDP growth in 2004 to be 3.7% and the U.S. recovery to continue at a 4.7% annual rate.
For the global forest and paper industry, an encouraging sign of recovery was the increase in the total net earnings of the world's 100 largest publicly-traded forest and paper products companies to an estimated US$6.1 billion in 2003 compared with US$4.9 billion in 2002 (PricewaterhouseCoopers).
Narrowing the global view, the U.S. pulp and paper industry has benefited to some degree by improved pricing. The price of NBSK pulp, for example, has risen considerably in the last 15 months. In January 2003, the average selling price was US$480 per ton. In January 2004, the price had increased by about $100. As of this editorial, NBSK is averaging US$642 per ton, with producers pushing towards $650. That's not bad considering that in April of 2002, NBSK had bottomed out at around $430-435/ton.
Newsprint has also seen a boost in price, although not as substantial as NBSK. In January 2003, newsprint in the U.S. was selling for $450-455/ton. By January 2004, producers were getting $500-505/ton. Currently, newsprint is going for about $520 per ton. So far, demand hasn't been what producers had hoped for, but they have done a good job controlling inventories. A sustained price drive, however, will hinge on continued economic development and the job market.
Can this economy generate enough jobs to fuel the recovery? According to a recent Reuters' news story, 308,000 new positions were created in March outside the farm sector, prompting economists to call for a steady decline in the unemployment rate to 5.4 percent by the end of the year from the current 5.7 percent.
The article also pointed to a jump in consumer prices in March, offering further evidence that the economy is no longer at risk of disinflation, and that the likely direction for prices is higher. Theoretically, higher prices may provide companies with the money at hand needed to hire more workers—a cycle that would be most welcome.
I know there is much more to the workings of the global economy than the items I've touched on, but the number of signs of improvement continue to mount. As for The Recovery; it might already be here and we just don't know it!
