What Will 2024 Bring?
Economic Experts Share Their Predictions for Forestry Professionals
Spring 2024
By John Casey
Cal Evans, senior director of
investor relations and market intelligence at Synovus
The persistent uncertainty in the national economy has been a prevalent worry for the past few years. Markets and interest rates have continually defied expectations, a persistent trend since the onset of the COVID pandemic. As Americans face all-time-high consumer costs, economic stability and financial planning have become increasingly challenging, with many eyes turning toward economists for guidance on the path forward.
At the annual Forestry Day at the Capitol gathering in February, theGeorgia Forestry Association welcomed economic experts Cal Evans, senior director of investor relations and market intelligence at Synovus, and Trip Jobe, vice president of sales for the forest value chain in North America at Resource Wise, to outline the macro and microeconomic trends for the forest products sector headed into 2024.
NAVIGATING ECONOMIC CROSSROADS
“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today. That phrase is particularly appropriate when you look at what the experts said was going to happen in 2023 and exactly what did happen,” said Evans.
He was referring to the discrepancies between economic predictions for2023 and the actual outcomes. Despite expectations of a rough year, most economic indicators remained strong. But, even with 2023’s expectation-defying performance, Evans still believes 2024 will buck the positive trend in favor of a mild to moderate economic decline. He forecasts slow GDP growth, an unemployment rate around 4.3%, and a normalized 3% increase in median home prices.
With eyes on the Federal Reserve’s next move, Evans warns that the political conditions of the coming year are likely to impact how rate cuts are deployed, and that people should be conservative in how much they trust the rate cut outlook.
“We expect these rates to come in con-current sessions in the summer — June, July and September” said Evans. “But it’s going to be interesting because the Fed doesn’t like to do anything that could be construed as political. Unfortunately, everything this year is going to be construed as political, so the timing will be paramount here.
Commercial activity indexes reveal a mixed picture for the coming year, according to Evans. Manufacturing shows signs of contraction while services show very slight expansion. Demand for commercial and industrial lending is decreasing by as much as 25%, indicating overall cautiousness toward economic conditions among businesses.
Evans’ outlook on real estate suggests it to be one of the weakest areas of the national economy. While single-family home prices have continued to rise, sales remain down in the face of high interest rates and oversupply in the market. While he expects some reprieve soon, he’s concerned that many Americans won’t be able to afford homes as savings rates have plummeted and individual debt is reaching all-time highs, particularly with student loans.
Commercial real estate (CRE) transactions have plummeted even worse, according to Evans. In 2021, there were over $870 billion in CRE transactions, compared to just $374 billion in 2023. CRE only saw one area of strength in 2023: senior living facilities. All other sectors, including office and multifamily housing, declined.
“Multifamily, which we generally consider a great sector and pretty low risk, had the second-largest value drop and actually the highest volume drop in terms of deals done,” said Evans.
Evans points to Atlanta as a prime example of the challenges facing multifamily properties. Extreme oversupply in the region is leading to a significant and sudden decline in rents, further challenging sales and development.
Though Evans outlined several challenges on the immediate horizon, he indicated that mild economic declines in 2024 will lend future stability for real estate and other sectors going into future years. “Survive until 2025,” said Evans.
At the annual Forestry Day at the Capitol gathering in February, theGeorgia Forestry Association welcomed economic experts Cal Evans, senior director of investor relations and market intelligence at Synovus, and Trip Jobe, vice president of sales for the forest value chain in North America at Resource Wise, to outline the macro and microeconomic trends for the forest products sector headed into 2024.
NAVIGATING ECONOMIC CROSSROADS
“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today. That phrase is particularly appropriate when you look at what the experts said was going to happen in 2023 and exactly what did happen,” said Evans.
He was referring to the discrepancies between economic predictions for2023 and the actual outcomes. Despite expectations of a rough year, most economic indicators remained strong. But, even with 2023’s expectation-defying performance, Evans still believes 2024 will buck the positive trend in favor of a mild to moderate economic decline. He forecasts slow GDP growth, an unemployment rate around 4.3%, and a normalized 3% increase in median home prices.
With eyes on the Federal Reserve’s next move, Evans warns that the political conditions of the coming year are likely to impact how rate cuts are deployed, and that people should be conservative in how much they trust the rate cut outlook.
“We expect these rates to come in con-current sessions in the summer — June, July and September” said Evans. “But it’s going to be interesting because the Fed doesn’t like to do anything that could be construed as political. Unfortunately, everything this year is going to be construed as political, so the timing will be paramount here.
Commercial activity indexes reveal a mixed picture for the coming year, according to Evans. Manufacturing shows signs of contraction while services show very slight expansion. Demand for commercial and industrial lending is decreasing by as much as 25%, indicating overall cautiousness toward economic conditions among businesses.
Evans’ outlook on real estate suggests it to be one of the weakest areas of the national economy. While single-family home prices have continued to rise, sales remain down in the face of high interest rates and oversupply in the market. While he expects some reprieve soon, he’s concerned that many Americans won’t be able to afford homes as savings rates have plummeted and individual debt is reaching all-time highs, particularly with student loans.
Commercial real estate (CRE) transactions have plummeted even worse, according to Evans. In 2021, there were over $870 billion in CRE transactions, compared to just $374 billion in 2023. CRE only saw one area of strength in 2023: senior living facilities. All other sectors, including office and multifamily housing, declined.
“Multifamily, which we generally consider a great sector and pretty low risk, had the second-largest value drop and actually the highest volume drop in terms of deals done,” said Evans.
Evans points to Atlanta as a prime example of the challenges facing multifamily properties. Extreme oversupply in the region is leading to a significant and sudden decline in rents, further challenging sales and development.
Though Evans outlined several challenges on the immediate horizon, he indicated that mild economic declines in 2024 will lend future stability for real estate and other sectors going into future years. “Survive until 2025,” said Evans.
Trip Jobe, vice president of sales for forest value chain
North America at Resource Wise
AMIDST CHALLENGES, FORESTRY REMAINS RESILIENT
Keeping in mind the overall macroeconomic indicators shaping the national economy, Jobe is openly aware of the challenges directly facing the forestry sector today.
But, despite the supply chain disruptions and rising diesel costs contributing to heightened freight rates, coupled with sluggish growth in home starts and an unfavorable lending environment, Jobe’s analysis suggests that these challenges, while substantial, should not be a cause for prolonged concern within the industry.
“Despite challenges, the forest products industry has shown remarkable resilience. The US South, in particular, remains a strong and attractive region for investment,” said Jobe.
Already the strongest region for forestry in North America, the US Southeast increased its production share from 38% to 40% of North American lumber and log markets, with Canada and the US Northwest in decline. The region continues to become more favorable for investment in the industry, with crippling government regulations in Canada and the US Northwest leading companies to divest from the regions.
The entire US marketplace for lumber and forest products has finally seen stabilization in the wake of the chaos caused by the COVID pandemic, according to Jobe. The cost curve for many operations is becoming increasingly favorable.
“Whether it’s wood cost, whether it’s environmental cost [or] it’s freight cost, as that price has come down over the last year and a half, the challenge of being able to cover that cash cost is getting closer and closer for some facilities,” said Jobe.
Those cost improvements have been more favorable in the US Southeast than other regions, according to Jobe. That cost competitiveness is attracting investments and providing for a stable environment for the forestry industry in the region. Overall, the US Southeast provides for the best matrix of cost, prices and diversity of products compared to any other forestry region in the world, according to Jobe.
“We are the envy of the world with our cost position and the wood basket that we have available to us across decades here,” said Jobe. “It’s a very positive story.”
FORESTRY INNOVATION PUTS GEORGIA MILES ABOVE THE COMPETITION
From biochar, to pellets, to sustainable aviation fuel (SAF), production of unique and innovative products in the US Southeast is leading the charge for the success of the local industry. SAF in particular has presented a unique opportunity for Georgia to lead a quickly growing, massive market for a forest-based fuel product.
There is a concise and cohesive effort globally to reduce the emissions of airline operations, according to Jobe — one that relies heavily on the development and greater utilization of SAF.
“Today, we’re using about 300 million gallons of sustainable aviation fuel across the globe,” said Jobe. “By 2050, the industry wants to get to 230 billion gallons of SAF. The airlines are all committed to this.”
According to Jobe, costs remain a significant challenge for SAF, which is significantly more expensive than traditional jet fuel, in part due to how it is manufactured. Thankfully, new research points to a solution: wood.
Many existing biofuel products utilize crops and crop products such as sugarcane and cooking oil to synthesize, but, according to Jobe, wood products are presenting themselves as both a more costand performance-efficient alternative.
"The exciting thing from a Georgia perspective is LanzaJet. It’s tremendous news in the industry. The feedstock that they’re going to utilize is sugarcane in that facility for their alcohol-to-jet process. But it’s a process that they’ve looked at and developed, and woody biomass has a potential to be involved in future opportunities with LanzaJet and others,” said Jobe. “From the wood-based perspective, GranBio got an $80 million Department of Energy grant about a year ago. They have a pilot plant going up, utilizing wood chips, and they’re looking to then build their first production plant potentially here in Georgia.”
As the world continues to look for sustainable innovations, forestry continues to provide solutions — many of which are coming from here in Georgia, the number-one state in the nation for forestry.
“There’s tremendous potential as Georgia continues to look at ways to be part of that bioeconomy, growing and utilizing our forestry industry,” said Jobe.■
John Casey is a strategic communications professional who supports clients through the art of storytelling. In his downtime, John can be found hunting and fishing on his family’s centennial farm in Northwest Georgia.
Keeping in mind the overall macroeconomic indicators shaping the national economy, Jobe is openly aware of the challenges directly facing the forestry sector today.
But, despite the supply chain disruptions and rising diesel costs contributing to heightened freight rates, coupled with sluggish growth in home starts and an unfavorable lending environment, Jobe’s analysis suggests that these challenges, while substantial, should not be a cause for prolonged concern within the industry.
“Despite challenges, the forest products industry has shown remarkable resilience. The US South, in particular, remains a strong and attractive region for investment,” said Jobe.
Already the strongest region for forestry in North America, the US Southeast increased its production share from 38% to 40% of North American lumber and log markets, with Canada and the US Northwest in decline. The region continues to become more favorable for investment in the industry, with crippling government regulations in Canada and the US Northwest leading companies to divest from the regions.
The entire US marketplace for lumber and forest products has finally seen stabilization in the wake of the chaos caused by the COVID pandemic, according to Jobe. The cost curve for many operations is becoming increasingly favorable.
“Whether it’s wood cost, whether it’s environmental cost [or] it’s freight cost, as that price has come down over the last year and a half, the challenge of being able to cover that cash cost is getting closer and closer for some facilities,” said Jobe.
Those cost improvements have been more favorable in the US Southeast than other regions, according to Jobe. That cost competitiveness is attracting investments and providing for a stable environment for the forestry industry in the region. Overall, the US Southeast provides for the best matrix of cost, prices and diversity of products compared to any other forestry region in the world, according to Jobe.
“We are the envy of the world with our cost position and the wood basket that we have available to us across decades here,” said Jobe. “It’s a very positive story.”
FORESTRY INNOVATION PUTS GEORGIA MILES ABOVE THE COMPETITION
From biochar, to pellets, to sustainable aviation fuel (SAF), production of unique and innovative products in the US Southeast is leading the charge for the success of the local industry. SAF in particular has presented a unique opportunity for Georgia to lead a quickly growing, massive market for a forest-based fuel product.
There is a concise and cohesive effort globally to reduce the emissions of airline operations, according to Jobe — one that relies heavily on the development and greater utilization of SAF.
“Today, we’re using about 300 million gallons of sustainable aviation fuel across the globe,” said Jobe. “By 2050, the industry wants to get to 230 billion gallons of SAF. The airlines are all committed to this.”
According to Jobe, costs remain a significant challenge for SAF, which is significantly more expensive than traditional jet fuel, in part due to how it is manufactured. Thankfully, new research points to a solution: wood.
Many existing biofuel products utilize crops and crop products such as sugarcane and cooking oil to synthesize, but, according to Jobe, wood products are presenting themselves as both a more costand performance-efficient alternative.
"The exciting thing from a Georgia perspective is LanzaJet. It’s tremendous news in the industry. The feedstock that they’re going to utilize is sugarcane in that facility for their alcohol-to-jet process. But it’s a process that they’ve looked at and developed, and woody biomass has a potential to be involved in future opportunities with LanzaJet and others,” said Jobe. “From the wood-based perspective, GranBio got an $80 million Department of Energy grant about a year ago. They have a pilot plant going up, utilizing wood chips, and they’re looking to then build their first production plant potentially here in Georgia.”
As the world continues to look for sustainable innovations, forestry continues to provide solutions — many of which are coming from here in Georgia, the number-one state in the nation for forestry.
“There’s tremendous potential as Georgia continues to look at ways to be part of that bioeconomy, growing and utilizing our forestry industry,” said Jobe.■
John Casey is a strategic communications professional who supports clients through the art of storytelling. In his downtime, John can be found hunting and fishing on his family’s centennial farm in Northwest Georgia.
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Georgia Forestry Magazine is published by HL Strategy, an integrated marketing and communications firm focused on our nation's biggest challenges and opportunities. Learn more at hlstrategy.com
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