Skip to comments.The FedEx Indicator
Posted on 03/23/2012 5:39:37 PM PDT by BfloGuy
The economy is supposedly improving, but even if we took the falling unemployment rate at face value, there are too many signs that something is wrong. There are too many anomalies. I noted a few weeks ago the anomaly of collapsing gasoline and diesel fuel consumption, which started well before the current run-up in pump prices that is causing Obama to contort himself in unnatural ways. Falling fuel consumption ahead of a price spike isnt consistent with a growing economy.
Today the Wall Street Journal takes note of one of my favorite indicators: Federal Express package shipping activity. Demand for package delivery is about as real-time an indicator as you can get, and doesnt depend on survey data, statistical modeling, and seasonal adjustment. Todays headline is FedEx Scales Back Economic Forecasts. The story says FedExs U.S. package delivery volume was off by 4 percent last quarter. Theyre scaling back their own in-house economic forecast for the rest of the year. Theyre going to take some planes out of service and park them in the desert, and shrink their workforce through attrition. Stay tuned.
I have an even better indicator. I travel roads of Jersey regularly. Traffic was a major problem just 4 years ago. I feel like Omega Man these days. Roads are practically empty.
Yes, the FedEx indicator is a TRUE indicator, unlike
the FALSE US Government/Obozo Fantasy Land indicators.
But FedEx delivers all my ammo. I figured with all the orders ive been placing....
Okay I have no doubts that the FedEx indicator is a real indicator.
However just how much of JITDS inventory is delivered by FedEx does it include ground shipments and, since I believe it is still private, does UPS have any equivalent?
There was some rich guy who used to track orders of the cardboard box manufacturers around the world to make his economic forecasts. Anyone know who that was? Seems like a good overall economic indicator.
The economy is in the dump and only getting worse. There are now close to 25 million people who are marginally employed or unemployed with very few prospects.
Yes, but JITDS is itself an indicator. It shows that everybody is starving their inventory. That is an indicator of business forecast of bad times ahead, because nobody has any inventory anymore. That worries me more than anything else.
My favorite is the “Big Mac” Index
If I remember the last published FedEx report I saw, they were not counting on the US for their future gains through the election.
I one worked with a Chinese colleague who insisted that egg roll size is a good indicator. When the economy is good, they are big and fresh, when bad, they shrink.
I realize JITDS would be a prime indicator.
However unless you can break down a percentage of inventory delivered by FedEx overnight or ground by industry it’s kind of hit and miss wouldn’t you think?
I mean railroad, shipping and trucking would be a greater percentage of JITDS inventory for the majority of industries.
Then, when it comes to consumer shipping I have no doubt that a great majority of Americans are gladly taking 3-7 day shipping as opposed to overnights on purchases.
Listen, I’m not debating the validity of the index because it makes perfect sense that FedEx would be a great indicator in and of itself. I’m just playing devil’s advocate as to just how accurate it can be since what it’s measuring isn’t crystal clear.
Much as I hate to admit it, we use more USPS especially with the rates overseas. No contest at all when shipping overseas with USPS vs UPS/fEDEX.
Spoke with my buds who have Amazon and Ebay seller accounts and their shipments have been down around 10% for the past year.
“does UPS have any equivalent?”
Sure, UPS has a fleet (225 planes), once, if still not, larger then FedEx.
By the way, I am from Memphis and was in high school with Fred Smith.
A childhood friend runs FedEx European operations.
I use the Cat Sleep Indicator. The less my cats sleep the more worried they are about my having to buy cut-rate cat chow. These days they hardly nap.
This is interesting, as my use of FedEx is up greatly (Amazon Prime) and visits to the local mall way way down.
Not here in the Houston area. But we are the center of the US oil and gas sector.
This is a sort of rolling depression, hitting different regions differently and at different times, it appears.
What you describe happened here in NC too, but back in 2008. We’re almost back to normal on the traffic, but there is now a surprising number of scooters on the road during commute hours.
Some people are right on the verge, if that’s the only way they can afford to get to work.
In the temperate months I ride my bicycle at a nearby regional fright distribution facility. In 06, 07 and 08 it was a beehive of trucking activity. Since then it has been relatively dead.
It is a mile riding my bike around it and flat, making it a convenient place to get exercise. Before the recession there were trucks parked at loading docks on all sides of the the massive facility. The last three years, the trucks are only on parts of the front side and the employee parking is very much reduced. I guess Obama’s green jobs don’t require the services of our trucking and freight distribution services.
I estimate the facility usage has been at no more than 20-25% of their former level of activity since the 08 crash.
ugh....fright = freight
UPS delivers 70%+ of the ground transportation packages in the US and a large portion of GDP sectors ship ground packages. There is no specific “index” but track their package volumes which are on their IR website.
The thing about FedEx is that they have an economist who projects the entire economy and issues public reports. UPS has numerous economists but don’t release it publicly. Also UPS CEO Scott Davis used to be on the Atlanta Fed Governors. Both companies touch huge amounts of global commerce.
FedEx hauls USPS mail on its planes.
Roads are practically empty.”
That’s because they have all moved to Houston.
More and more businesses are recycling boxes or using the USPS flat rate free boxes. I have not bought new boxes for the past 3 years and my little biz has been rebounding since November. My suppliers all either use recycled boxes or the flat rate USPS ones.
Once you make an adjustment when business is slow, you tend to keep it, even when things pick up. So, I would not call that a valid indicator, these days.
I do know that I am keeping UPS busy, both with business shipments and personal online purchases. FedEx is more expensive for me than UPS. I use USPS for small retail orders or orders to AK and HI.
FAQ: Why does CR give everything away for free? Because he feels like it ;-)
I'm frequently asked for sources of data, so here is an update to the list ranking economic data. For each indicator I've included a link to the source, and a link to the current graph gallery.
These lists are not exhaustive (I'm sure I've left a few off), and the rankings are not static. As an example, right now initial weekly unemployment claims is B List data, but when (if) the expansion takes hold, weekly claims will move unceremoniously to the 'D List'.
I've marked several indicators with '***' indicating I think this data is currently more important than usual. This includes weekly claims and several real estate related releases (delinquency reports, negative equity, vacancy rates).
Some of the lower ranked data is useful as leading indicators. As an example, the Architecture Billings Index is a leading indicator for investment in commercial real estate. And the NMHC apartment survey leads changes in apartment rents and vacancy rates. Also some of the lower ranked data helps forecast some of the more important data.
Note: There has been some research (by Wall Street analysts) about how "surprises" for many of these indicators impact the stock market. In general the ranking is similar to this list, with the employment situation report being #1. Surprisingly (at least to me) investors tend to react more to "surprises" for existing home sales than new home sales, even though the later is far more important from an economic perspective.
And on Existing Home Sales: This was a tough choice. For me, the key to the NAR report is the inventory number - I watch it closely at times (I'd even say that existing home inventory would be 'B List' data right now - if it was more accurate), but the sales number is much less important than inventory. (Note: This summer I expect the NAR to revise down sales and inventory for the last few years).
BLS: Employment Situation Report ( Employment Graphs )
BEA: GDP Report (quarterly) ( GDP Graphs )
Census: New Home Sales ( New Home Graphs )
Census: Housing Starts ( Housing Graphs )
ISM Manufacturing Index ( ISM Graph )
Census: Retail Sales ( Retail Graphs )
BEA: Personal Income and Outlays ( graph )
Fed: Industrial Production ( graphs IP and Capacity Utilization )
BLS: Core CPI ( graph CPI )
***DOL: Weekly Initial Unemployment Claims ( graph weekly claims )
Philly Fed Index ( Graph Philly Fed )
NY Fed Empire State Manufacturing Index ( Graph Empire Index )
Chicago ISM: Chicago PMI
Census: Durable Goods
ISM Non-Manufacturing Index ( Graphs )
House Prices: Case-Shiller and CoreLogic ( House Price Graphs )
NAR: Existing Home Sales ( Graphs Existing Home )
NAHB: Housing Market Index ( Graph NAHB HMI )
Census: Trade Balance ( Graph Trade Balance )
***MBA: Mortgage Delinquency Data (Quarterly) ( Graph MBA delinquency )
***LPS: Mortgage Delinquency Data ( Graphs LPS Delinquency )
***CoreLogic: Negative Equity Report (quarterly) ( Graphs Negative Equity )
***AIA: Architecture Billings Index ( Graph ABI )
***Reis: Office, Mall, Apartment Vacancy Rates (Quarterly) ( Graphs REIS Vacancy Rate )
***NMHC Apartment Survey (Quarterly) ( Graph NMHC Survey )
Reuters / Univ. of Michigan Consumer Confidence Index ( Graph Consumer Confidence )
MBA: Mortgage Purchase Applications Index ( Graph MBA Index )
BLS: Job Openings and Labor Turnover Survey ( Graph JOLTS )
Census: Construction Spending ( Graph Construction Spending )
1 Census: Housing Vacancy Survey (Quarterly) (Graphs Homeownerhip , Vacancy Rates )
Fed: Senior Loan Officer Survey (Quarterly)
AAR: Rail Traffic ( Graph Transportation )
ATA: Trucking ( Graph Transportation )
Ceridian-UCLA: Diesel Fuel Index ( Graph Transportation )
NFIB: Small Business Survey ( Graphs NFIB Survey )
Fed: Flow of Funds (Quarterly) ( Graph Household Net Worth )
STR: Hotel Occupancy ( Graph Hotel Occupancy )
CRE Prices: CoStar, Moodys ( Graphs )
Manufacturers: Light Vehicle Sales ( Graph Vehicle Sales )
NRA: Restaurant Performance Index ( Graph )
Fed: Consumer Credit ( Graph Consumer Credit )
DOT: Vehicle Miles Driven ( Graph Miles Driven )
LA Port Traffic ( Graph Port Traffic )
BLS: Producer Price Index
ADP Employment Report
Conference Board Confidence Index
NAR: Pending Home Sales
Census: State Unemployment Rates , ( graph )
1 : There are questions about the accuracy of the HVS.
BEA: Bureau of Economic Analysis
BLS: Bureau of Labor Statistics
Census: Census Bureau
DOL: Dept of Labor
DOT: Dept. of Transportation
Fed: Federal Reserve
AAR: Association of American Railroads
AIA: American Institute of Architects
ISM: Institute for Supply Management
LPS: Lender Processing Services
MBA: Mortgage Bankers Association
NAHB: National Association of Homebuilders
NAR: National Association of Realtors
NFIB: National Federation of Independent Business
NRA: National Restaurant Association
STR: Smith Travel Research a href=
There used to be a cardboard box plant in my town, but it packed up and closed down a few years ago. I assumed they moved to China, but maybe they just didn't have the business because of China.
It is dangerous work. My husband spent a few days working at a box factory way back 40 years ago or so. He says that he saw how many of the older workers were missing fingers or parts of fingers and he decided it wasn’t worth it.
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