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FOREST PRODUCTS COMPANY EXECUTIVE WARNS PRESIDENT CLINTON OF IMPENDING RECESSION

 CHICAGO, Jan. 21 /PRNewswire/ -- An executive with a transnational forest products corporation has informed President Clinton on three occasions since last December that a recession could be triggered this spring by a 100 percent increase in lumber prices that would douse consumer confidence and halt improving housing starts.
 Quoting the trade publication Random Lengths, Gerald M. Freeman, senior vice president and general manager of Stone Container Corporation's (NYSE: STO) Forest Products Division warns the president in his most recent letter, being mailed tomorrow, that lumber prices "have already increased 48 percent since the second week in October," and that this increase has occurred "essentially without any increase in demand."
 Record-breaking Price Run
 This record-breaking price run of $119 hikes the lumber composite price to $368. The surge is attributed to inadequate supply and to dwindling inventories.
 Alluding to restrictive regulatory controls and the Endangered Species Act which have shuttered about 150 sawmills in the Pacific Northwest, Freeman informed the president that that region's "traditional lumber sales of 9.5 billion feet have fallen to less than 3 billion feet." He also notes that anticipated harvest rates of 3 billion feet fell to 1.5 billion feet in the region during 1991.
 "Industry reserves that averaged 12.5 billion feet during 1982-1986 are now in the 1.6 billion feet range, and will not satisfy this year's demand," Freeman states.
 No Kick-start for Economy
 Freeman notes that "Housing starts increased by an annual rate of 12 percent during each of the past two spring seasons. Lumber prices increased 32 percent in 1991 and 45 percent in the 1992 comparable time frames. These increases occurred because of the lack of available raw material. After the run-up, the housing market as well as the economy fizzled."
 Freeman says "low interest rates, better consumer confidence, and seasonal factors," could increase housing starts 25 percent this spring. But he cautions: "With the lumber price increase and housing fizzle will come the resultant condition of recession.
 "In order to help alleviate these expected dynamics," Freeman concludes, "we suggest adherence to the nation's historic concept of multiple use of our forests, and more flexibility in the ill-conceived and costly regulations brought about by an imbalanced Endangered Species Act."
 Stone Container Corporation is a major multinational forest products company, producing and marketing pulp, paper, packaging products, construction lumber, plywood and veneer.
 January 22, 1993
 Dear Mr. President:
 In previous letters dated December 11, 1992, and January 5, 1993, we predicted that lumber prices could increase by 100 percent by this Spring, because of lack of supply of raw material. We also warned that, traditionally, housing has kick-started the economy, and that this predicted price increase could cause housing starts and the economy to fizzle.
 Just to keep you up to date, the composite price of lumber, as reported by the forest products market's trade publication Random Lengths (January 18, 1993), has already increased 48 percent since the second week in October.
 This has occurred essentially without any increase in demand, and is attributable to lack of supply. Region 6 in the Pacific Northwest vividly illustrates the dilemma:
 -- Traditional timber sales of 9.5 billion feet have fallen to less
 than 3 billion.
 -- Harvest traditionally averaged 3 billion feet and in 1991 was 1.5
 billion.
 -- Inventory reserves that averaged 12.5 billion feet during 1982-
 1985 are in the 1.6 billion feet range.
 In order to help alleviate these expected dynamics, we suggest adherence to the nation's historic concept of multiple use of our forests, and a loosening of ill-conceived and costly regulations brought about by an imbalanced Endangered Species Act.
 Most Sincerely,
 Gerald M. Freeman
 -0- 1/21/93
 /CONTACT: Charles S. Phillips of Phillips Communications, 904-285-4555, or evenings, 904-285-5681, for Stone Container Corporation/
 (STO)


CO: Stone Container Corporation ST: Illinois IN: PAP SU: ECO

AW-JB -- FL001 -- 7343 01/21/93 11:04 EST
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Date:Jan 21, 1993
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