One of the most powerful human foibles is extrapolation bias in which we have a strong tendency to believe that recent trends will continue forever. In contrast, the world of economics and finance is largely cyclical. We have a great current example of this phenomenon in the demand for shipping.
During the pandemic, services were generally unavailable due to lockdowns resulting in a rush to purchase larger residences, pools, recreation and exercise equipment, high-end appliances, and a variety of other goods. Combining this demand with labor shortages, there were massive transportation bottlenecks and soaring freight costs. As you might expect, this demand brought more capacity into the industry with the result that it has now fallen on difficult times. This chart depicts the demand for trucking and you will note that it is currently off more than 75% from 2021 levels. The next chart shows the average cost around the world of shipping a container and it has also declined by about 80%.
Finally, this chart shows that the demand for cardboard boxes has declined materially from the peak despite still strong consumer spending.
These trends are not a commentary on the current state of the economy but instead remind us to be very careful about extrapolating trends-markets anad economies have a way of self-correcting!