When fewer boxes ship, what does it mean for the economy?
Just like a cardboard box traveling from factory to warehouse to doorstep, economic theories are being passed around, examined and repackaged. That unassuming brown cube has become a tool some economists are using to forecast whether a recession is on the horizon.
Economists call it the cardboard box index. When box makers begin scaling back production, it can signal trouble ahead for the economy, according to Virginia Tech economist Jadrian Wooten.
Wooten points to the 2008 Great Recession, noting that today’s slower box production and rising unemployment echo warning signs from that period.
How a package signals demand
So how can a simple cardboard box tell us about the economy? Every time a package arrives at your door, it’s a tiny signal. About 75% to 80% of goods travel this way, according to Investopedia.
“The cardboard box index is a surprisingly telling way to track the flow of the economy. Since the vast majority of consumer goods, from food to electronics, are shipped in corrugated boxes, changes in box production often reflect broader shifts in demand,” said Chip Lupo, writer & analyst with WalletHub.
When businesses stockpile boxes, it’s like the heartbeat of commerce speeding up. However, when the shipments slow and the stacks shrink, it can signal that the economy is taking a deep, cautious breath.
“It would suggest weaker demand in the broader economy. If shipments keep falling, other indicators like GDP or unemployment may eventually catch up,” Wooten wrote in the Monday Morning Economist.
GDP, or gross domestic product, measures the economy’s growth, but because it’s only published quarterly, it can fall behind real-time changes.
The latest report from the U.S. Bureau of Economic Analysis shows the economy grew 3.3% in the second quarter, covering April through June. The BEA said the increase reflected higher consumer spending and fewer imports, which are subtracted from GDP.
“While you should not rely on this index by itself, using it alongside other indicators like freight tonnage or durable goods orders can provide an early look at economic trends. In that sense, cardboard boxes aren’t just about packaging, they’re a window into consumer confidence and the overall health of the economy,” Lupo told Straight Arrow News.
Beyond boxes: other economic signals
Lupo said economists don’t rely on cardboard boxes alone.
“For example, a spike in people searching for help paying their mortgage is not a good sign for the economy – just like a big increase in Pentagon-area pizza orders is not a sign of impending peace,” he said.
They also watch traditional indicators like new home construction and car sales, but some use more unconventional signals. For example, tracking lunchtime traffic can show whether people are buying meals out or bringing lunch from home, offering clues about consumer spending.
Copper production is another gauge since the metal’s wide range of industrial uses reflects activity across multiple markets.
Lupo said there are plenty of economic indicators like this to watch, if you know where to look.
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Ella Rae Greene, Editor In Chief
