Recession Indicator Ends As Cardboard Box Demand, Prices Rise: BofA

Angle down icon An icon in the shape of an angle pointing down. Jens Büttner/picture alliance via Getty Images The cardboard box recession is ending, as packaging prices climb, Bank of America says.This recession indicator flashed last year when demand for packaging fell to 2009 lows.Now, the industry expects 3% growth outlooks for the coming quarters.

Packaging prices are poised for a rebound, spelling the end for America’s cardboard box recession, Bank of America said.

While industry data has been negative since the second half of 2022, new surveys from the bank reveal a surging growth outlook for the quarters ahead.

That’s good news for the broader economy, as it puts to rest at least one recessionary indicator. When last year’s demand for cardboard packaging dropped to 2009 lows, analysts feared it meant a major consumer spending pullback.

Charles Schwab declared a “cardboard-box recession” last June, warning that it would impact everything from labor markets to equities.

Since then, both the economy and markets have broadly surprised to the upside. Until recent months, consumer spending has been resilient, which has helped keep stocks pushing on to record highs.

Now, things are also looking up for the packaging industry.

“Out of the independent box makers that we survey, we went from a 0.6% growth outlook to over 3%, which, in my world, that’s significant,” research analyst George Staphos told Yahoo Finance. “Additionally, what we’re hearing from the respondents is an overwhelming sense that prices would continue to move higher.”

Bank of America Global Research

While he acknowledged that a good part of the uptick comes from inflation, BofA’s survey shows that demand expectations are also playing a role.

Over the next six to twelve months, 62% respondents see demand either “better” or “much better,” the note said. That’s compared to 39% who thought this in April.