Cardboard packaging decline flashes warning for US growth

Core Insights - A significant decline in demand for cardboard packaging is raising concerns about the overall economic health in the United States, as it serves as a key indicator of consumer activity and industrial performance [1][3]. Group 1: Economic Indicator - Corrugated cardboard is referred to as the "cardboard box index" by economists, as it reflects the state of trade, manufacturing, and retail [2]. - Recent data indicates that shipments of corrugated boxes in the US have reached their lowest levels in years, which is alarming since consumer spending constitutes about two-thirds of the American economy [3]. Group 2: Causes of Demand Slump - The decline in cardboard demand is attributed to several factors, including: - Post-pandemic adjustments where online shopping surged during lockdowns, leading to a normalization of packaging orders at lower levels as consumers shift spending from goods to services [4]. - Trade pressures and rising costs of raw materials like wood pulp due to tariffs and changing trade policies, which are squeezing box manufacturers' margins [4]. - Retailers and e-commerce companies are adopting lighter mailers and reusable packaging, reducing the need for traditional corrugated boxes [4]. - A slowdown in key industries such as construction and automotive, which are major consumers of packaging, resulting in fewer shipping orders [4]. Group 3: Economic Implications - The drop in cardboard demand is seen as an early sign of a potential recession, as reduced packaging often precedes declines in GDP and employment [4]. - Job losses are anticipated in sectors like paper mills, packaging plants, and timber suppliers, with several pulp mills in North America already closing or reducing capacity [4]. - Lower packaging orders may lead to corporate caution, with firms delaying production and investment, which could negatively impact financial markets and economic confidence [4].