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Economics and NAFTA argue


Oregon’s largest export is suffering. Lumber prices are at the lowest weekly level in almost five years. You can’t blame a recession in the economy this time though. Lumber prices have fallen dramatically from the beginning of this year and there are many different causes for it. The price of framing lumber has dropped from a high of $401 to $274 per thousand feet, since the beginning of this fiscal year. As a result of the plunging lumber prices, layoffs, reduced work shifts and reduced operated hours will occur. This will affect our local economy drastically. The housing market has been flooded with homes since the beginning of this year and the homes aren’t selling. In the beginning of 2005, home developers and home buyers created a fast moving market place because of the low interest rates and low lumber prices, so homes were cheaper to buy and to build. This created a high demand for homes and when the demand is high, the price of homes is even higher. The mass builders took advantage of this and created an excess of homes. Then suddenly the homes stopped selling because of the high prices in the market, higher interest rates and high lumber prices. This has a direct correlation with the prices of Douglas fir 2-by-4s and the amount produced. When the demand of lumber was high, the supply of lumber was trying to keep up with high-speed housing market and the prices were at its peak. With the summer coming to an end, the peak home construction will slow even further and lumber price will continue to fall.
November 14th, 2004: The issue of plummeting lumber prices arose like it would two years in advance from this date. This time when the lumber prices fell it was caused by foreign markets influencing our domestic market. January 2004, marked the tenth anniversary of NAFTA (North American Free Trade Agreement). The introduction of NAFTA erased any tariffs that would be imposed on products entering American via the Canada-United States boarder or the Mexico-United States. This allowed the once high taxed foreign products to enter America free of charge.
The continually growing influence of NAFTA, dictated whoever in North America that could produce the cheapest and highest quality product sold their product. This caused...

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Category:   Economics

Length:   4 pages (825 words)

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