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Sustainability

Look Inside The Box

August 25, 2011
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It''s no secret that the economy has the tendency to give anyone paying attention to its ebb and flow a virtual heart attack.

The economy, to some, can seem like a vast land of unknown.

Even at the best of times, the most veteran chief executive officer (CEO) might misread the signs the economy is giving off — and small wonder.

One day, things might look like they''re progressing; the next, it seems like we''ll never reach the bottom.

For the past few years, companies and consumers alike have operated on dwindling budgets, tightening their belts and settling in for the long haul.

Businesses have tried to do more with less, while trying not to compromise the quality of the products and services they offer.

Likewise, consumers often look for the same products and services they always have, but each consumer is looking for the best deal, the lowest price.

Taking Stock

For the most part, it seems easy to gauge the health of the economy by watching company stock prices or by seeing how well their sales are doing and how often they''re booked for certain services.

However, it seems that market watching is not the only way to keep an eye on the ups and downs of the economy.

The little known way to measure the U.S. economy is in the production of an item that we all have readily at hand, probably sitting in our garages: The cardboard box.

It is impossible that the multifunctional cardboard box could serve as an economic indicator, you say? Think again.

The cardboard box has become more important, and not just to pack up a lifetime of knickknacks.

What Is It?

It''s called the cardboard box index.

According to definition, the cardboard box index is "an index used by some investors to gauge industrial production by using the output of cardboard boxes to predict the purchases of non-durable consumer goods."

It is believed that nearly 75 percent to 80 percent of all non-durable goods are shipped in corrugated containers.

"When it comes to retail products, the demand will usually be ahead of the economy," said Tom Youngberg, vice president of Pollock Paper Distributors.

"If the paper and corrugated container companies are doing well, it''s typically a pretty good indicator that the economy is about to pick up," Youngberg added.

The greater the amount of cardboard boxes being produced, the greater the amount of cash that is being invested by companies to produce goods.

Tracking the number of cardboard boxes that are being produced at any time is a quick way to take the temperature of the market.

Generally, the most commonly used indicator of economic growth is the gross domestic product (GDP).

The GDP refers to the market value of all final goods and services produced within a country in a given period.

While the GDP is a solid economic indicator, it is only published quarterly.

According to an article featured in The National, there is significant lag time, as it takes several months to calculate, revise and finalize the GDP before it is published, making this solid economic indicator consistently behind the times.

Because businesses most often use cardboard boxes to pack and ship various manufactured goods, their production is usually an indicator of manufacturing activity.

While it''s not an exact science, Youngberg did explain that parallels can certainly be drawn between an uptick in the production of cardboard boxes and a recovering economy.

No matter what you do now, the cardboard box will no longer be an innocuous object; instead, it takes on something of a more mystical power.

See the economy in a new light by thinking inside of the box.

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