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Crashing lumber prices are sending a "troubling" warning sign for the U.S. economy following uncertainty over President Donald Trump's tariffs and a "deteriorating housing market," the Wall Street Journal reported Monday.

"Crashing wood prices are troubling because they have been a reliable leading indicator on the direction of the housing market as well as broader economic activity," according to the Journal.

Two U.S. sawyers last week said they will decelerate production and "curtail output, slowing the decline."

Trump tariffs and import taxes have caused unpredictable impacts on supply chains.

"During the Covid-19 lockdown, two-by-four prices nearly tripled the prepandemic record, an early sign of the inflation and broken supply chains that would bedevil the economic reopening," the Journal noted. "When the Federal Reserve began raising interest rates in 2022 to curb inflation, lumber was among the first assets to decline in value. Now, prices are signaling caution again."

Lumber prices have had a turbulent road. In anticipation of Trump's threatened higher duties on Canadian imports and tariffs on wood, a surplus of wood was set aside in the United States.

Wood prices climbed in the spring when the White House claimed "it was investigating national security aspects of imported lumber and Trump threatened steep tariffs on all Canadian goods."

The price plummeted when Trump let down tariff talk on Canada, and then prices surged again in May when buyers were looking ahead.

"In May, they started surging again as buyers began stocking up ahead of the scheduled hike in existing Canadian lumber duties and Trump’s threatened tariffs," according to WSJ.

The Trump administration is reportedly considering more tariffs — as it did with aluminum, steel and copper products — on imported wood, citing national security concerns.

Producers plan to continue cutting back on production.

In July, residential building permits slipped to just 1.4 million units, a seasonally adjusted annual rate, and the fewest units in construction since June 2020.

Construction spending in the U.S. dropped by 3.4% in July compared to the record amount set in May 2024.

CNN contributor and New York Times podcast host Lulu Garcia-Navarro warned on Tuesday that President Donald Trump is taking a "double-edged" sword to the economy, as evidenced by the latest job numbers.

The Department of Labor published data on Tuesday that revised the previous quarter's job numbers downward by 900,000, which was the largest downward revision in the agency's history. The revision came about a month after Trump removed the Bureau of Labor Statistics commissioner because the agency published what he described as unreliable data.

Garcia-Navarro said the data BLS published shows there are "real problems" surfacing in Trump's economy.

"To me, what's most interesting about these numbers is manufacturing," Garcia-Navarro said. "There are some real problems in manufacturing."

Trump has made it a goal of his second administration to re-establish America's manufacturing base. To that end, he has implemented numerous tariffs that seek to protect American manufacturers from foreign competition.

"This whole idea that somehow manufacturing is going to be resurgent, I think, is showing a lot of weakness," Garcia-Navarro said.

The data also adds to the growing skepticism about the state of the U.S. economy. Trump has repeatedly said the U.S. economy is in good health, although some experts like J.P. Morgan CEO Jamie Dimon have their doubts.

“I think the economy is weakening,” Dimon told CNBC on Tuesday. “Whether it’s on the way to recession or just weakening, I don’t know.”

Garcia-Navarro said part of the economic weakness is being driven by decreased federal spending.

"You're seeing a double-edged sword here, where they are actually limiting the economy in two different ways that are showing," she added. "I think the word recession is a word that we haven't seen in a while, but we might be due for it."

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