Apr 26, 2023 - Economy

What slower box sales say about the economy

Data: FactSet, company filings; Chart: Axios Visuals
Data: FactSet, company filings; Chart: Axios Visuals

Box sales ain't what they used to be.

Why it matters: Sales of the humble corrugated containers tell us a lot about the state of the goods economy, as everything from dishwashers to food to toys get stuffed into them.

State of play: The post-COVID swing from spending on stuff, to spending on services, continues. So sales of boxes, which boomed during the pandemic, have flattened out.

What they're saying: "The shift of consumer buying preferences, more towards service oriented spending, persistent inflation and higher interest rates continued to negatively impact consumers' purchases of both durable and non-durable goods," said Thomas Hassfurther, an executive VP at Packaging Corporation of America.

  • The packager reported weaker-than-expected results on Tuesday, sending its share price down 7%.

Zoom out: The view from Boxville stacks up with what we're hearing from other key players in the goods economy.

  • United Parcel Service (UPS) shares took a nearly 10% header on Tuesday after its earnings also fell short of expectations.
  • "We saw a shift in consumer spending," UPS chief executive Carol Tomé told analysts, adding, "Disposable income is shifting away from goods to services."

The bottom line: These are tough times for the box business. But the shift to services spending could be good news for the strength of the overall economy, since services accounts for more than 70% of GDP.

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