Food & Beverage Spending Growth = More Packaging

Real Disposable Income. October real disposable income was $12.79 billion (seasonally adjusted at an annual rate), an all-time high. In October, real disposable income grew 2.7% compared with one year ago (most of the last six months were revised upward). The month-over-month rate of growth was below 3% in eight of the last nine months. The annual growth rate has decel- erated steadily since August 2015. In October 2016, the 2.9% annual rate of growth was the slowest since November 2014. Also, this was the fourth month in a row that the annual rate of growth was below 3.1%, the historical average.

Food Packaging. Somewhat surprisingly, real disposable income tends to lead food and beverage spending by almost a year. Food and beverage spending contracted at a very modest rate in 2015. But with the strong growth in income, food and beverage spending has grown at a rapidly accelerating rate. Food and beverage spending has grown above the historical average growth rate for seven months in a row. In October, food and beverage spending grew 5.2% compared with one year ago. The annual rate of growth in October was 2%, which was the fastest growth since December 2014. Food and beverage spending tends to lead food and beverage production. If food and beverage spending continues to grow at an accelerating rate, then food packaging should be poised for further growth in 2017.

Institutional Packaging. This category consists primarily of stretch film, sheet, and tubing, but consumer and industrial product liners and shrink film also are a significant part of this segment. Since all of this packaging is used to ship products, tracking the changes in the trucking industry can provide a good estimate of what is happening with institutional packaging.