Scoring Boxes
Deteriorating Trade Erodes Paper Packaging Markets BY DICK STORAT
S
4
BOXSCORE March/April 2021
Real Consumer Spending for Nondurable Goods
250
4.0%
240
3.5%
Index (2009 = 100)
230
3.0%
220 210
2.5%
200
2.0%
190
1.5%
180
1.0%
170
0.5%
160 150
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2018
2019
2020
0.0%
Percent Change Year-to-Date
Source: BEA
Industrial Production Nondurable Consumer Goods 106
1.0%
104
0.5% 0.0%
102
Index (2012 = 100)
hifting consumer patterns in response to the coronavirus pandemic have been at the center of strong paper packaging markets since the pandemic’s beginning. Consumption of packagingintensive nondurable goods has risen, providing packaging suppliers with expanding market opportunities. As the top chart at right depicts, inflation-adjusted consumer spending for nondurable goods surged as the pandemic led to travel lockdowns and recovered rapidly as the pandemic continued. Through November, spending for these goods had risen by 2.6%. Yet, while consumption of food and other fast-moving goods has grown, domestic production has not kept pace. Most of the initial surge of demand for pantry and paper goods came from existing stocks, and the subsequent recovery in domestic production of these goods was much more muted than the recovery of spending. As the middle chart at right shows, production sank during March and April and recovered only slowly thereafter. Domestic production of nondurable goods has yet to rise above prior year levels. And at the end of November, monthly production was declining, and production had declined by 2.8%. That left a spread of more than five percentage points between consumption and production. Imports supplied the additional nondurable goods that were consumed but not made in the United States. To get some perspective on the impact of international trade on paper packaging markets, we identified the commodities in international trade that required protective paper packaging. The table at right summarizes international trade
-0.5%
100
-1.0%
98
-1.5%
96
-2.0%
94
-2.5%
92
-3.0%
90
-3.5%
88
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2018
2019
2020
-4.0%
Percent Change Year-to-Date
Source: U.S. Census
Packageable Goods Trade Deficit ($ Billions Over 11 Months, 2020) PACKAGEABLE COMMODITY Computers & Electronic Equipment Textiles & Apparel Pharmaceuticals & Medicines Appliances Food & Beverage Fruits, Vegetables & Tree Nuts Cleaning & Toilet Supplies Other Packageable Goods TOTAL LIABILITIES & NET ASSETS
EXPORTS $175 18 62 8 68 16 16 66 $429
IMPORTS TRADE DEFICIT $342 $167 136 118 154 92 31 23 91 23 29 13 13 (3) 131 65 $926 $497
