I never thought that cardboard could be an economic indicator
Demand and output for cardboard boxes and other packaging material fell sharply in the fourth quarter of 2022, according to data released by the American Forest & Paper Association and Fibre Box Association on Friday.
It’s the latest indicator that consumer demand is eroding following the pandemic. Dwindling savings, inflation, rising interest rates and fears of a recession may all be swaying consumers to spend less.
Such pressures would show up in the humble box industry, which serves as an excellent barometer for the larger economy. Practically everything we consume and use spends some time in a box, ranging from online orders to food sent to grocery stores.
I suppose it is a variant of the Dow theory where the transports lead the industrials (either up or down).
Could be. Or, I am reminded of what happened to the chip industry in late 2000.
What happened in 2000 with chips was that companies were entering multiple orders, with several vendors, in the hopes that one of the vendors would make delivery when the parts were needed. When production capacity caught up with demand, in late 2000, on time delivery became more reliable, and the redundant orders were cancelled. Chip industry order backlog collapsed, without there being an actual drop in chips actually being used. I remember Broadcom sneaking out an earnings warning, due to the elimination of redundant orders, during the short session after Thanksgiving Day of 2000. I was paying attention, and ran to the phone to call the broker to sell my Broadcom…and I kept on selling tech stocks through that December.
The narrative, since the plague, has been “shortage” of everything.
Is the drop in container volume real, or redundant orders being cancelled the same way redundant orders for chips were cancelled, because on time delivery has become more reliable?
In the 1950s one of the biggest econ indicators were how many $crews GM used.
I bet a large part of it is Amazon. While they used to send EVERYTHING in a cardboard box, nowadays they send most things in plastic envelopes of varying sizes.