Bloomberg reports that Analysts and investors will scour Friday’s retail sales report for a readout on how US households are feeling about the economy. Those watching the cardboard box industry say they already have an idea.
A nontraditional economic indicator, sales of the corrugated cardboard used to make the boxes that transport everything from doughnuts to dishwashers are slumping, signaling that retail demand across industries may be due for its own correction in the not-too-distant future.
US box shipments—that is, volumes of empty packaging materials sold to retailers, which in turn use them to ship orders to warehouses, storefronts and Americans’ doorsteps—fell to the lowest second-quarter reading since 2015, according to data from Fibre Box Association, a trade group. (Corrugated cardboard also goes into other items, such as 3D advertising displays, but since the vast majority is used for packaging, the industry tends to use “box shipments” and “corrugated cardboard shipments” interchangeably.)
Memphis-based International Paper Co., one of the world’s largest pulp and paper companies, reported a 5% drop in daily US box shipments in the quarter from the same period a year ago, while packaging giant Smurfit Westrock Plc, based in Dublin, saw a 4.5% slide in North American corrugated cardboard volumes, the biggest drop across all of the regions it operates. “If volume picked up in the United States, that would give us more confidence, but we haven’t seen that yet,” Chief Executive Officer Anthony Smurfit said on a recent earnings call.
In a country where consumer spending makes up almost 70% of the economy, any retrenchment in retail activity tends to put economy watchers and government officials on alert. In June, US retail sales rebounded after two down months, temporarily quelling anxiety about the health of the American consumer. (July’s retail numbers will land on Aug. 15; so far, the forecasts suggest another month-on-month rise, thanks in part to bargain-hunting by consumers during Prime Day and other online events.)
The strength of the highly seasonal cardboard box industry isn’t necessarily a one-to-one proxy for retail spending, but—like beauty-shop outlays or consumer sentiment—it can flash early signals when things start to go amiss. And because boxes aren’t usually ordered that far in advance, they can offer a nearly real-time indicator of buying and manufacturing activity, says Brett House, a professor of economics at Columbia Business School. “It’s evolving along with demand for consumer packaged goods and their manufacturers,” he says.
Most of the 2025 drop in packaging demand appears to be tied to President Donald Trump’s mixed messaging on tariffs. Companies don’t yet know how the levies will affect costs and long-term demand for their finished products, and they’re not stocking up on bulky packaging while they wait to find out. (Couriers such as FedEx Corp. and United Parcel Service Inc. have opted not to give their usual update on full-year guidance with everything so up in the air, though UPS CEO Carol Tomé told analysts that the small-package market in the most recent quarter was “unfavorably impacted by US consumer sentiment that was near historic lows.”) The hope is that box demand will start to pick up in August and September, “based upon the settling of the tariff situation—if that happens,” Smurfit said on his late July earnings call.
Organic growth in consumer goods “is just not happening,” says Ryan Fox, a Bloomberg Intelligence analyst. At the grocery store, for instance, Fox says he now sees buy-two-get-two—or even get three—promotions to drive volumes, never a great sign for demand. At the same time, low housing turnover means consumers aren’t buying as many big items like (boxed) refrigerators and loveseats to fill their new spaces, says Adam Josephson, a former sell-side analyst who covered the paper and packaging sector for over a decade before starting his own newsletter.
The box slump marks a big turnaround from the early days of Covid-19, when demand for packaging was so high that some North American paper mills started churning out cardboard instead of the thinner stuff, triggering a brief paper shortage. (In fall 2021 an estimated 100 million catalogs didn’t make it to US consumers’ mailboxes, because their printers simply couldn’t get the paper.) But that pandemic-era run on cardboard offered only a temporary reprieve for a paper and pulp industry that’s been struggling for a long time with high costs and old facilities.
Smurfit Westrock just announced plans to shutter an older mill in Iowa, while International Paper earlier this year said it would close four facilities, including a Louisiana mill that makes containerboard—the brown paper that goes into making a box. The company had been the seventh biggest employer in Louisiana’s Natchitoches Parish—so vital to the region that a local school board shut down two schools as a result of the lost tax dollars from the closure. “There’s just some economics to this, and International Paper has to look at their business model,” says Ronnie Williams Jr., the mayor of nearby Natchitoches city, whose father and grandfather both worked at the mill during its 50 years of operation.
One saving grace would be if Trump pulls off a domestic manufacturing renaissance, resulting in more locally made goods that need to be shipped, says Ron Sasine, the founder of Hudson Windsor, a retail packaging consultant. Still, it would have to be enough to counteract the effect of fewer imports, which often arrive in the US in bulk shipments that need to be repackaged—a box-heavy process. A drop in American food exports to angry trading partners could also hit packaging demand, he says.
In short, it’s not looking great out there for box manufacturers. “They are very much hoping that box demand will get better, but it’s just not happening, and they have no control over it,” Josephson says. Across industries, “all the measures I track are pointing in a not-very-good direction.”