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Falling Fedex shipments are a lead indicator of another US recession

Posted on 20 September 2012 with no comments from readers

Bloomberg economist Richard Yamarone presents the graph below in his Bloomberg Brief this morning. It shows how a fall in Fedex shipments always preceeds a recession in the US economy, and that is what it is showing now.

FedEx is an economic bellwether as operator of the world’s largest cargo airline, and yesterday reduced its profit outlook for the second time this year, citing a slower economy.

Falling GDP

The shipper said its 2012 US GDP growth forecast is 2.2 per cent and 1.9 per cent for calendar year 2013, which is 0.5 points lower than our fourth-quarter earnings forecast. That’s not yet a recession but it is getting closer to one.

‘Exports around the world have contracted and the policy choices in Europe, the US and China are having an effect on global trade,’ said CEO Fred Smith.

Clients are choosing the cheapest options. The company’s ground-delivery business in the US, which offers a less expensive alternative to air delivery, posted a sales increase of 7.9 per cent to $2.5 billion.

Transportation is always a key indicator of a coming recession and the slowdown in global shipping movements over recent months as well as courier services like Fedex is a pretty sure sign that the global economy is heading back into recession. Fedex is just be cautious with its GDP predictions.

Posted on 20 September 2012 Categories: Business Travel, Global Economics, Investment Gurus, US Stocks

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