The US is in a ‘cardboard box recession’ characterized by high inflation.

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  • According to Charles Schwab’s Jeffrey Kleintop, America is in the midst of a cardboard box recession.
  • Kleintop pointed out that demand for cardboard boxes will continue to decline, which precedes recessions in the past.
  • The slowdown could lead to higher inflation later in the year, he said.

According to Charles Schwab Global Investment Strategist Jeffrey Kleintop, the United States is in the midst of a “cardboard box recession,” and that means the economy will experience a significant reduction in inflation at the end of the year.

Although recessions often hit all sectors of the economy, the downturn is currently only seen in the manufacturing and trading industries, Kleintop said in a note on Monday.

According to the Fiber Box Association, that led to a drop in demand for cardboard boxes — a sign of a recession that predates previous downturns in the U.S. economy.

Although the recession has been officially declared by the National Bureau of Economic Research, it says the economy is currently in a “cardboard box recession,” which could lead to a weak labor market and additional revenue pressures for companies. Investors could also see muted stock returns, especially if weakness spreads to other sectors such as services.

But the decline may have a silver lining in softening inflation, as the Purchasing Managers’ Index measures manufacturing prices – which includes carton prices – which typically leads inflation in the US in six months.

“The collapse of the cardboard box could be good news for inflation,” Kleintop said, pointing to positive inflation trends in Europe. “Europe’s latest PMI price index shows that inflation will be closer to 2% over the next 6 months than the current 6%. As inflation continues to rise, it may continue to decline.”

A fall will give US markets a boost as corporations have been on a high spending spree and interest rate hikes for the past year. Central banks have hiked 500 basis points to tackle inflation, a move that could send the S&P 500 down 20% in 2022.

As inflation improves, the Fed may pause inflation, which analysts say could be big for stocks.

Investors, on the other hand, dialed back their inflation expectations and their expectations for future price hikes. According to data from the Federal Reserve, the five-year, five-year rate of inflation, the five-year rate of inflation fell to 2.23% this week. Markets are bullish on a 79% chance the Fed will hold off on further rate hikes at next week’s policy meeting, according to CME’s FedWatch tool.



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