When analyzing the economy, there are marquee indicators like gross domestic product and the unemployment rate. But if you look for them, there are ways to measure the economy all over the place. Like maybe in your recycling bin? 

Ryan Fox is a containers and packaging analyst for Bloomberg Intelligence. He spoke with “Marketplace” host Kai Ryssdal about what’s happening in the cardboard box economy and what that says about American consumers. The following is an edited transcript of their conversation:

Kai Ryssdal: I want to give credit where credit is due. Here we heard you on the on the Odd Lots podcast at Bloomberg the other day with Joe Wiesenthol and Tracy Alloway. And I was like, this is the most interesting conversation about a subject I know nothing about that I have ever heard, and I must talk to this guy so here we are. Would you give us the state of play in the cardboard box industry, and more importantly, why it matters, what it tells you? 

Ryan Fox: Cardboard boxes, they do have some price inelasticity, right? So it doesn't matter what the price is, people are going to choose to ship a corrugated box. However, we have noticed over the last probably two years where that number, that calculation on price elasticity, is actually getting a little bit larger. If it holds up in the future, we don't know, but if prices continue to rise for coordinated boxes, maybe that demand goes away. And so, through the first half this year, demand for boxes fell by about 2.3%. It appears that it is slowing down even more in the third quarter. We've published that we think it's going to be down about 3%. Candidly, I don't know that. I'll be very surprised if it's more than 3% now, if it's more than 4% I will be very surprised.

Ryssdal: And what's that going to tell you? What are you going to read into that if it's, you know, three, 4%-ish.

Fox: So there's two things. First, the American consumer is broadly under threat, right? We have a very high amount of credit card debt. And we also just published a piece here recently where we correlated, or tried to show that there is a correspondence between real personal disposable income and box shipments, and so that real personal disposable income is going away. And we're also seeing box shipments kind of go away with it, so that’s part of it. The other part of it is there are now viable substitutions, like the bags that you're seeing from Amazon, whether they're plastic or whether they're paper there, they are becoming more and more a reality, especially in e-commerce. So, it's a very good litmus test for the broader consumer economy, right? Because such a high percentage of goods travel in these boxes, if we stop making boxes, or if that goes down, it's typically indicative that there's something happening in the consumer economy, and people are not buying to the same extent that they once were.

Ryssdal: Change of gears here, then get away from the consumer and talk to me about corrugated boxes and packaging as a business, because, you know, there's been demand, and we all use cardboard boxes, and companies have said, ‘Hey, let's make cardboard boxes.’ What do we know now about the business side of this?

Fox: So, on the business side, we've seen several very big mergers in the last year, and so now we have three really big companies that control about 65% of the marketplace. And that is, that is a real power play. It's a classic oligopoly.

Ryssdal: Last thing, and I'll let you go. How does one become such an expert on corrugated boxes? I mean, on Odd Lots, you were like, I can tell by the stamp on the box where it's from and where it's made and who made it, and how long it's been around, and all that jazz.

Fox: So, I got into the industry in 2010 by complete accident. The company that I've been working for during the 2000s went bankrupt, and I was in school to get an MBA. My MBA had a concentration in innovation management, so there was a lot of new product design development and in manufacturing stuff in it. And yes, I mean, I just completely nerded out. My youngest daughter, she slept her first eight months in a corrugated box? 

Ryssdal: Oh, stop it. 

Fox: I kid you not. We put her baby bed inside the box, and she slept in the closet. It was fantastic.