https://markets.businessinsider.com/news/commodities/recession-warning-cardboard-demand-economy-2008-financial-crisis-ecommerce-shipping-2023-1

An under-the-radar economic indicator is flashing a warning signal to the broader economy as consumer spending slows down. The indicator in question? Cardboard boxes.

According to data from the Fibre Box Association, US cardboard box shipments declined 8.4% in the fourth-quarter, representing the largest quarterly decline since the second quarter of 2009, amid the Great Financial Crisis.

Cardboard boxes are an overlooked barometer of the health of the economy as they are a massive component of consumer spending. Whether its ecommerce or shipping bulk goods to stores, cardboard boxes play a role.

Demand dropped for cardboard boxes at a time when elevated inflation and high interest rates started to impact the spending habits of consumers. Retail sales have fallen in three of the past four months, which encapsulated the usually busy holiday spending season.

As demand for cardboard boxes fell, so did US cardboard box operating rates, according to the Fibre Box association.

The operating rate for manufactures of cardboard boxes fell to 80.9%, which was the lowest level seen since the first-quarter of 2009. In other words, about 20% of US operating capacity to produce boxes was at a standstill.

Demand for cardboard boxes typically sees low-single-digit percentage gains of 1%-2% year-to-year, but that demand was supercharged during the COVID-19 pandemic as consumers stayed home and did more shopping online.

The recent drop in demand could simply be a correction to the last few years of outsized growth, but at a time when more and more economists are expecting an imminent recession, it’s another data point for investors to worry about.