That’s because cardboard box shipments, which are considered a bellwether for all sorts of economic activity, have recently tanked to a decade low, sending alarm bells throughout the economy. In a short term solution to this economic crisis, producers are reducing their current production and laying off or furlough employees. This trend is proving disruptive to the major snack manufacturers, who have recently reported disappointing sales numbers. If you look only at these particularly alarming signals, you’d be surprised to learn that the U.S. economy continues to expand. Yet consumer spending is robust, and unemployment rates have stayed level.
As consumers rethink how they spend their money, businesses are reconsidering how to prioritize their spending. The sales performance of Gray’s Papaya, a popular food chain known for its affordable hot dogs, illustrates how consumers are increasingly seeking value in their purchases. In this article, we’ll explore all of these trends in detail. It’ll dive into what a world with less cardboard box production, fewer snack food sales and more e-commerce might look like.
Cardboard Box Shipments and Industry Impact
At the same time, the cardboard box industry is enduring immense hardships, with shipments recently dropping to ten year lows. Nearly 9 percent of domestic box production capacity is scheduled to close. This would be the biggest drop since the 2008 financial meltdown. This combination of circumstances has led many producers to take drastic measures, such as layoffs and reductions in production.
“That would suggest weaker demand in the broader economy. If shipments keep falling, other indicators like GDP or unemployment may eventually catch up,” – Jadrian Wooten
As cardboard boxes are essential for packaging and shipping goods, a decline in their production could indicate broader economic struggles. The industry should be watching these trends closely as they continue to unfold. They recognize that these trends might portend bad things to come for other sectors that rely on shipping materials.
Furthermore, the impacts of these reductions go deeper than just the number of units produced. When companies lay off employees, communities bear the cost in lost unemployment and less local spending. Economic analysts warn that as more households begin to feel the financial pinch, complex discretionary spending will be further eroded.
Snack Food Sales and Consumer Behavior
Cardboard box shipments are down. Truthfully, many of the world’s largest snack manufacturers are finding themselves at a loss with these product portfolio deficiencies. Most had dramatically inflated prices in the past several years, a move that helped kill consumer demand.
“We continue to see lower-income, lower/middle-income consumers stretched, strained, really controlling their spending,” – Alex Miller
Now that commodity prices have increased, consumers are picking and choosing what they buy. Gray’s Papaya is seeing a very specific tick in their sales data. The “Recession Special,” which includes two hot dogs and a drink for $7.50, has more than doubled in popularity over the past few weeks. Likewise, the $5 one-dog-and-drink Local Special that was rolled out systemwide in 2018 is seeing a jump in orders, too.
Rachael Gray, of Gray’s Papaya, reflected on consumer behavior during economic downturns:
“When Nick was alive, he would always say, ‘If we’re going into a recession, you’re going to slow down and Gray’s will carry us; and then in good times, it’s the other way around.’”
When consumers experience economic pressure, they respond to the market by searching for less expensive food. This pattern reflects their resilience during difficult times. The relationship between economic anxiety and consumer preferences highlights the significance of value-oriented purchases in times of uncertainty.
Outdoor Activities and Entertainment Spending
While some sectors struggle, others show resilience. Spending on outdoor activities like camping is often higher in spring and summer months. According to recent data from Bank of America, spending at campsites was up 2000% this year alone. In just one month, it increased by 15% from the previous August.
“Consumers may be trading airfare for fire pits, drawn by affordability and a wellness-focused vibe,” – Bank of America analysts
This change reflects an emerging trend where consumers are working to reduce their dependence on temporary or impulse spending. They are price conscious, and they are looking for affordable alternatives to spend their leisure time. The sustained interest in camping indicates that in times of economic uncertainty, consumers are valuing experiences over material goods.
To that end, movie theaters have become an important countercyclical economic indicator. As of September 28, box office revenue tracking was up 4.5% from last year. Many Americans, barely able to afford day-to-day life, need the movies as an economical mental vacation from reality.
“During the Great Depression, people went to the movies in huge numbers, so it does seem that the escapism and the respite from the real world that movie theaters provide has value as much today as it did 50 or even 100 years ago,” – Paul Dergarabedian
With economic pressures increasing across the board, consumers will be searching for escapist and value-driven escapism.