FedEx Total Package Shipments Point to Sharp Decline in GDP

Interesting data point here via Bloomberg Economics Brief:

CHART OF THE DAY:  From today’s “Bloomberg Economics Brief,” Bloomberg economist Rich Yamarone releases a chart showing that FedEx’s total U.S. package shipments may indicate a bleak outlook for economic activity. Is a recession in the cards?

Federal Express Cuts 2013 Profit Forecast on Economy, Fuel

FedEx Corp., an economic bellwether as operator of the world’s largest cargo airline, reduced its profit outlook for the second time this year, citing a slower economy. The shipper said its “2012 U.S. GDP growth forecast is 2.2 percent and 1.9 percent for calendar year 2013, which is 0.5 points lower than our fourth-quarter earnings forecast.” “Exports around the world have contracted and the policy choices in Europe, the U.S. and China are having an effect on global trade,” Fred Smith, chief executive officer of the company, said. The company’s ground-delivery business in the U.S., which offers a less expensive alternative to air delivery, posted a sales increase of 7.9 percent to $2.46 billion.

— Richard Yamarone, Bloomberg Economist

 

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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • Boston Larry

    Does anyone know if others such as UPS are increasing their market share? I all package delivery services are seeing a similar decline, then this does not bode well for second half US GDP growth.

  • Jason

    Graph shows shipments were a lagging indicator in the past two recessions — any reasons why it is ahead of GDP dropping this time ?

  • quark

    We still have the rails.

  • http://www.conventionalwisdumb.com Conventional Wisdumb

    Jason,

    GDP is subject to revision downward so the two could meet up again and therefore the leading and lagging could be misleading.

    From the ECRI website last week:

    http://www.businesscycle.com/ecri-news-events/news-details/economic-cycle-research-the-2012-recession-are-we-there-yet
    “Think back to four years ago in 2008, a couple of days before the Lehman failure. Looking at the data in hand, you would see GDP growth at about 1% in Q1 and 3% in Q2. More specifically, Q2 GDP growth had just been revised up on August 28 from 1.9% to 3.3%, sparking a 212-point Dow rally that day. But what data supports our recession call? We just discussed what GDP had looked like four years ago. Please note that for each of those two quarters GDP growth has since been revised down by two to three percentage points. Those are huge revisions.

    Likewise, GDP growth prints for each of the first two quarters of the two prior recessions were revised by about two to four percentage points. The takeaway is that, in the early stages of recession, the data are almost always revised down, and the revisions tend to be quite substantial near business cycle turning points.

    Knowing this, how should we feel about the current GDP estimates that average less than a 2% pace for the first half of 2012, i.e., weaker than first-half GDP growth looked four years ago? Please remember, by that time, in September 2008, the economy had already spent nine months in recession. “

  • kman

    no we dont – Norfolk southern just confessed, cut it’s outlook.

  • Matt

    Add in a weak Baltic Dry Index and we’ve got a poor showing by air, land, and sea. Feels like a recession to me.

  • Alberto

    Let me know how the US can avoid recession when 1) Europe is in a hard recession for 2012 and 2013 and we’re going to see the first social unrests as early as January 2) China is in hard landing as all the insiders are telling you since last spring (Pettis, Chauvanec etc…) 3) India’s economy is not just slowing but collapsing with the rupee at the historical minimum, currency reserves depleted and social problems mounting 4) Midde-East is on fire 5) should I have to continue… ?

    Bernanke is not a stupid puppet but one who knows that his arsenal is limited. He did a great job for months keeping the market up using “psychological easing” and now, because bad data are coming, he had to switch to real QE. He just had no choice. The market will stay over the water line up to the november election than it will tank like a stone but thanks to Ben probably it will not reach the 2008 minimum.