Abstract: The U.S. economy entered a period of slow growth in 2000, fading into economic recession in 2001, the first broad economic downturn in a decade. This forum will discuss economic trends and longer-term implications for forestry particularly in the South. The recent economic downturn is noteworthy because of its connection to a significant recession in U.S. manufacturing beginning in the second quarter of 2000. The recession in manufacturing was linked to an exceptionally strong U.S. dollar, which attracted a flood of manufactured imports, limited growth in exports, and contributed to a record U.S. trade deficit. Led by the decline in manufacturing the economic downturn had a pronounced impact on the pulp and paper sector, with annual U.S. paper and paperboard production off by about 7 percent in 2001 relative to the peak in 1999. For paper and paperboard, the recent downturn rivals the last major multi-year downturn that occurred during the energy crisis of the early 1970s. As if able to foresee the recent economic downturn, the U.S. pulp and paper industry had exhibited restrained capacity growth in recent years. Thus, mill closures and capacity reductions in 2001 helped to forestall what might otherwise have been a complete market rout for paper and paperboard commodities, but wood pulp and pulpwood markets all but collapsed. The housing sector remained more robust well into the recession, and thus market conditions for solid wood products and saw timber remained upbeat until September 2001. After the events of September however lumber markets faded quickly with apparent loss of confidence and concern about economic prospects along the lumber distribution pipeline. A turnaround in the economy was widely anticipated earlier this year, and this forum will provide an update on market conditions in 2002. Nevertheless the recent economic downturn has had a fairly profound impact, particularly in terms of growth in the pulp and paper sector, and pulpwood markets in the South. Ramifications of the recent economic downturn and longer-term implications for forestry are issues that will be presented and discussed in this critical issues forum.