October 3rd, 2025 | Is cardboard demand a warning sign of a slowing economy? Can AI revenue cover all the debt it’s created? SEC scrutiny on private investments, Home sale proceeds & More

Is a reduction in cardboard demand a warning sign of a slowing economy? The simple answer is yes, but it also is one of many indicators we are seeing. Cardboard is used in many items in the economy from pizza boxes to the multiple items you get delivered from online stores. The numbers show that box shipments after reaching record highs during the pandemic are now down to levels not seen since 2016. If you look at a per-person basis, the numbers are pretty staggering, as they are down over 20% from their 1999 peak. Part of this decline could be from companies like Amazon that have reduced cardboard consumption by shipping some items in paper and plastic mailers and potentially even becoming more efficient in their packaging practices, I remember seeing many times a box inside of a box. From what I can tell, I think they no longer do that, which would be a big reduction in cardboard. The price of container board has been on the rise over the years, which can cause users of cardboard to reduce their consumption as the price of corrugated sheets has risen 30% from six years ago to $945 per ton. I would not predict based on this data about cardboard that the economy is heading into a recession, but it is something definitely worth adding to the list to remember!

 

Will the revenue from AI cover all the debt and expenses it created? AI is definitely part of the future, but has overbuilding surpassed the revenue that it can create? When one steps back and looks at the numbers they are staggering. Over the past three years, major tech firms have committed more funds towards AI data centers than it cost to build the U.S. interstate highway system that took 40 years to build. These numbers are even adjusted for inflation. In the next five years, the AI infrastructure spending will require $2 trillion in annual AI revenue. If you think that’s a lot of revenue you are correct. In 2024 the combined revenue of Amazon, Apple, Alphabet, Microsoft, Meta and Nvidia did not hit $2 trillion. It is also five times the amount of money spent globally on subscription software. Consumers have enjoyed the free use of AI, but it appears for businesses paying more than thirty dollars a month per user is the breaking point. AI executives claim the technology could add 10% to the global GDP in the years to come. With that thought they are saying the benefit comes when it can replace a large number of jobs and that the savings would be enough to pay back what they invested. My question is, if you’re replacing all these jobs, consumers will have less money to spend and probably won’t need or care about AI. There are many history lessons about bubbles that did not pay off because of the over excitement on inventions with such things as canals, electricity and railroads just to name a few. People may remember the excitement over the Internet and the building of tens of millions of miles of fiber optic cables in the ground. The amount spent was the equivalent to about one percent of the US GDP over a half a decade. The justification from the “experts” was that the Internet use was doubling every hundred days. The reality was only about 1/4 of the expectation came to fruition with traffic doubling every year. Most of the fiber cables were useless until about 10 years later thanks to video streaming. A report out of MIT said they found 95% of organizations surveyed are receiving no return on their AI product investments. In another study from the University of Chicago showed that AI chatbots had no significant impact on workers earnings, recorded hours or wages. I still believe AI will be here to stay, but the question is have the expectations gone too far? I think they have! 

 

Finally, some scrutiny on private investments from the SEC! The SEC has an investment advisory committee that was formed back 15 years ago that provides guidance to the regulator. Recently, the committee approved a set of recommendations on how to deal with the private market and protect the less sophisticated investors. The recommendations cover the key problems with private investments for investors, which include how they come up with valuations, how complex they are and that they are not a liquid investment. I thought it was also a wise move that they recommended the SEC demand better disclosures and also who can and cannot invest in private markets. I was very happy to see that they’re not just putting across the board if you have a net worth of X amount you can invest in private investments. The recommendation was based on the investor's level of investment sophistication. I’m hoping the SEC comes up with these rules quickly before more people find themselves in a private investment that they cannot get out of and perhaps lose all their money. Today would not be soon enough to pass this legislation. My recommendation is if you’re not in any type of private investments, don’t go into them! No matter how good your broker makes it sou