Federal Reserve Economic Data

Our previous post looked at the general category of office and stationery supplies, which includes printing paper. Inflation-adjusted sales are now just one-fifth of what they were in the early 2000s.

Today’s post looks more closely at paperboard, a sturdier form of paper used in, among other things, packaging and shipping goods. Has paperboard gone the way of paper? The FRED graph above tracks the manufacturing of paperboard containers, and the FRED graph below tracks a similar path for the manufacturing of the paperboard itself, which includes recycled materials.

Despite the rise in e-commerce and all its related packaging, there have been clear downturns for paperboard. But the story here isn’t a simple one. Paperboard is used for more than retail packaging, and retail packaging with paperboard may have declined for many reasons—for example, by substituting other types of packaging. We’re fortunate to have some industry insights to help illuminate the story.

From the American Forest and Paper Association:

“U.S. paper and paperboard capacity declined by 1.6% in 2023 [with] an average decline of 0.9% per year since 2014. [M]ore than 1.7 million tons of capacity, mostly using wood fiber, was permanently removed in 2023 as the industry faced demand weakness from customer destocking and economic headwinds.”

From Darren Miller, a senior director in the packaging industry:

“Sustainability requirements, lightweighting technology, and consumer preferences have yielded significant changes in the industry, including a shift from virgin to recycled capacity. Many companies also factor-in packaging size to try to minimize impact on landfills, shipping, and warehouse inventory. Despite its recyclability and decomposition properties, cardboard takes up more space than, say, a plastic bag or other flexible packaging that incorporates both foil and plastic.

Also consider inventory positions and the economy in general: Back in 2020-21, there were shortages of virtually everything. Manufacturing played catch-up, eventually exceeding demand. Customers overbought based on inflated demand signals, resulting in full warehouses and stores in an economy with consumers purchasing less due to inflationary pressure. This may partly explain the large dip in 2022. Put simply, if fewer products are being produced, purchased, and shipped, then less cardboard is needed and thus produced.”

How these graphs were created: Search FRED for “paperboard” and select the series for “paperboard container” and “paperboard mills.”

Suggested by George Fortier and Christian Zimmermann.

“People buy weeks in advance leading up to holidays: June kicks off vacation time when people consume more and the 4th is the largest beer consumption holiday. January is the great letdown in sales after the winter holidays, when resolutions take hold, and dry January has now become a big deal.” —Jerry M. Green Jr., CSW, Cicerone Certified Beer Server

Drinking an alcoholic beverage over the December holidays is a common tradition. A less-common, but growing tradition is to abstain the following month in dry January.

These two consumption patterns are supposed to happen regularly at the same time of the year each year, so we want to look at data that are not adjusted for seasonality. Usually, we want seasonally adjusted data to understand what’s more or less than normal compared with other times in the year. But today it’s all about the season.

The FRED graph above tracks sales of alcoholic beverages by wholesalers. It certainly looks like there’s a repeating pattern: a regular spike in December and a corresponding downturn in January. In fact, January habitually has the most-pronounced downturn, perhaps because end-of-year sales start in November, continue through December, and peter out in January. There’s also a spike around June, ahead of the July 4 holiday.

Are these regular fluctuations in alcoholic beverage sales reflected in their prices? Our second graph tracks the relevant sub-category in the consumer price index, again, without any seasonal adjustment.

If you zoom-in on the monthly values, you can see December inflation rates tend to be low and January rates tend to be high. Exactly the opposite of what’s expected from the simple demand and supply analysis that says prices should be higher when demand is higher—in December. It may be the particularly high supply during this month that leads to increased competition and, therefore, lower prices.

How these graphs were created: For the first graph, search FRED for “wholesale alcohol” and be careful to take the series that is not adjusted for seasonality. For the second graph, search for “CPI alcohol,” being careful again. Click the “Edit Graph” button and for the units select “percent change.” Note: You don’t want “percent change from preceding year,” as this would lose any seasonal effects.

Suggested by George Fortier and Christian Zimmermann.

The North American Free Trade Agreement (NAFTA), implemented more than thirty years ago in 1994, eliminated import tariffs and other trade barriers between Canada, Mexico, and the US.

Today we explore two questions central to assessing the effectiveness of that trade agreement for US trade:

1. Did the trade agreement spur trade between the US and the other member nations?
2. In the longer run, did it sustain high levels of trade between the US and the other member nations?

The FRED graph above includes data on US exports to Canada and Mexico and US imports from Canada and Mexico, both as percentage shares of US GDP. It also includes two vertical lines: one in 1994 to indicate the start of NAFTA and one in 1989 to indicate the start of the Canada-US free trade agreement, which preceded Mexico’s entry in a free-trade bloc with the US.

We don’t see a remarkable effect on US-Canada trade shares from the 1989 agreement. But we do see growth in trade shares between the US and both its trade bloc partners after NAFTA, through 2000.

So, the answer to the first question seems to be yes: At least on the basis of export- and import-to-GDP ratios, NAFTA implementation seems to have spurred US trade growth with its bloc partners.

The answer to the second question is mixed. While US trade shares with both bloc partners grew in the 1990s, the pattern in the 2000s has been different. Trade shares with Canada declined between 2000 and 2023 to such an extent that the 2023 shares are lower than the corresponding 1994 shares. US-Mexico trade shares have grown modestly or declined in recent years, although 2023 US-Mexico trade shares exceed their 1994 levels substantially. So, while US-Mexico trade gains from NAFTA have been sustained (despite the post-Great Recession global trade slowdown), US-Canada trade gains from NAFTA have not been sustained.

FYI: NAFTA was replaced by the US-Mexico-Canada Agreement in 2020.

How this graph was created: Search FRED for and select the annual series of “Gross Domestic Product.” From the “Edit Graph” panel, add “U.S. Exports of Goods by F.A.S Basis to Canada”; take the annual frequency aggregated as a sum and apply the formula (b*100)/(a*1000) (to get percentages). For imports, use the same method with “U.S. Imports of Goods by Customs Basis to Canada” and repeat this process for Mexico. For the vertical lines, use the “Add Line” tab again, but this time add two “user-defined” lines with values 0.01 and 2.49 for both 1989-01-01 and 1994-01-01.

Suggested by Hoang Le and Subhayu Bandopadhyay.