What UPS says about the economy

The shipping company is optimistic about the country's economic future. Now if only its customers were as well.

By Kim Peterson Oct 25, 2011 3:04PM
United Parcel Service (UPS) really wants the economy to turn around.

You can tell from executives' comments that they see a recovery within reach. We're so close, and they're enthusiastic. But there is still too much uncertainty, too many question marks blocking the way.

"Over the last month or so, we are starting to see better economic numbers, so there is more optimism out there, and that could turn things around," chief executive Scott Davis told analysts on the company's earnings call Tuesday. "We are still expecting a slow-growth economy, but I don't think it is as negative as people were thinking two and three months ago."

The company's chief financial officer also took an optimistic tone. "It's good to see the U.S. firm up," he told Dow Jones. "We're excited about the holidays."

The comments were particularly striking because they came on the same day as reports showing U.S. consumers are extremely negative about the economy. Consumer confidence is at its lowest point since March 2009, according to The Conference Board, a private research group. That doesn't bode well for the holiday season.

So who's right, UPS or American consumers?

UPS and rival FedEx (FDX) are closely watched as economic indicators. At any given moment, UPS is generally transporting 2% of the world's gross domestic product and 6% of the U.S. gross domestic product, reports TheStreet.

UPS sees the global picture and the short-term future in ways that American consumers can't. What I gather from executive comments is this: We're still not out of the woods, but the trend lines are turning back up. It doesn't look like a double-dip recession is on the way.

The company said people simply stopped buying goods in the third quarter. That led to flat growth in overall package volume. One of the biggest drops was in shipments from China to the United States.

It's hard for UPS to make a definitive call for the fourth quarter. People aren't making holiday purchases yet, but it's unclear if those purchases are being pushed into the fourth quarter. UPS thinks package volume could grow 1% to 2% in the fourth quarter, but hinted that increased demand could spur a late surge in shipments.

"Consumer demand for the holidays remains to be seen," Davis said.

UPS said its third-quarter profit was $1.04 billion, or $1.06 a share. That was a penny more than analysts had expected. Revenue was $13.17 billion, about what analysts expected. Operating margin fell to 12.3% from 13.3%.

FedEx might be feeling better about the economy as well. In September, the company cut its full-year forecast and said it expected sluggish economic growth.

But this week, the company said online shopping will help it reach record shipments this holiday. The workload will be so strong that FedEx plans to add 20,000 seasonal workers -- about 18% more than last year.

So is the U.S. sluggish or recovering? Right now, we seem to be walking the fine line in between.

Tags: FDXups
Oct 25, 2011 5:59PM
We can get all those clowns out if we pass term limits for congress and senators. No more career politicians, no pensions, they must go on social security just like the rest of us. 12 years maximum and make it retroactive.
Oct 25, 2011 5:02PM
vote out all incumbents in every election ,no matter how low level gov job it is. do this every election untill all new faces are in place down to mayors and council , etc.that is when change will happen as the politicians wont be bought out, and outlaw all special interest and lobbyist influence, at the federal level
Oct 25, 2011 4:24PM
If the stimulus money would stay in the United States , most of the economy would recover.
Oct 25, 2011 6:56PM

Nothing will change until we get ALL the lobbyist out of Washington, it will be business as usual.

Oct 25, 2011 4:33PM

u got problems?--how about brain cancer--get laid off--and pay $65 a day for healthcare--

cutting back on spending---example what I have done

no going out to see movies

no eating out

cancelled netflix dvd rentals--just instant view

cancelled newspaper-magazines--trash service-shop at basic food stores(aldi)--got onto brothers family plan for cellphone--my share $10month--was paying $45 month-no vacations

fix things yourself--hire someone-joke--auto mechanics $100 hr.--

greed-corruption--moron politicians--greedy millionairs-billionairs--spending $billion a day for our military-home security--fixing other country problems-organic foods--forget that--

Oct 25, 2011 5:11PM
It doesn't do much good in my opinion to say vote out the incumbents because as soon as they get into office they sell their souls to corporate interests just like all of the rest have. There will be a few good ones but not enough of them to make that much difference. Lets face it, greed and corruption are in total control in this whole world, not just here. You can't even trust your next door neighbor as soon as he has the power in his hands to better his own life once he's been elected to a political office. This country used to be about the people now it's all about them.
Oct 25, 2011 4:08PM

Prices are so high because the Democrates believe in over the edge green technology that is shutting down the production of less expensive means of energy.  Like coal and drilling for our own oil.  Coal plants are closing and we get sued by tree huggers when we want to drill for our own oil.  Americans are becoming more and more dependant on foreign nations who hate us.

People are struggling because there are no jobs.  All the regulation that is being placed on the private sector has sent so many jobs overseas and the unions are destroying most of the private sector jobs so that manufacturing is going across the border and overseas.  Now the unions are collapsing the rest of the country because they are entrenched in the public sector, where unions don't belong, and now we are stuck with higher taxes to pay unsustainable pensions that these public sector teachers and cubicle workers think they are entitled to. The problem with unions is that they think your money is their money but at some point you always run out of other people's money.

The economy will be slow until the over regulating stops, the over taxing of the small business which creates most of the private sector jobs stops and like I said before get the unions out of the picture.  You know who is going to pay for all this don't you?  The middle class because B.O. is here is CA and the rich are paying 35,000 a plate to go to his fundraising dinners.  If I hear B.O. say one more time 'lets tax the rich' I am going to vomit.  The rich are his freinds so he will not be taxing the rich anytime soon.

Oct 25, 2011 3:54PM
When I eat in a restaurant or go to the shopping mall here in West Palm Beach, FL, it seems to be crowded and people look like they are spending money.  In the grocery store,  people have full shopping carts.  I am not insensitive to unemployment; however, I think the doom and gloom is out of proportion to reality.  There does seem to be a lot of worry which is intensified by the media.  By the time America wakes up to reality it will be too late to take advantage of low prices and opportunity.
Oct 25, 2011 5:22PM

I think both john 111 and Sunny Calif. have a valid point.  Voting out the incumbents won't do any good if it isn't done consistently.  To make that idea work, ALL the voters would have to agree to get rid of them EVERY election.  Maybe if the professional politicians realized that they weren't going to be living on 'welfare by politics' they'd actually start doing the job the forefathers meant them to be doing.  Of course, we'd also have to get rid of the 'pension for life' laws guaranteeing even a one-termer pay forever.  Think that will happen anytime soon?


Oct 25, 2011 4:00PM
Dear Demo. Don,get your head out of your a*#,and get off your Democratic band wagon.It's a shame that there are so many out there that still have your mentality.This is exactly what is killing our country. Your kind and Barry are going to put America in the sh#*^!*. Wake up and smell the coffee,before it becomes too expensive to own.
Oct 25, 2011 5:25PM
UPS profits are up because they keep raising their prices and fees.
Oct 25, 2011 4:47PM

Who's head is in the sand?


The UPS is a good indicator.  Unfortunately or not, it's by far not the only one.  It only measures a certain thing certain ways.  Heck, even a simple gallon of milk can be an economic indicator to a degree because it's a basic useable item.  But, not with juggling games that super markets play sometimes.  Other things have to be calculated on top of that to realize a true indicator because some things are manipulated out of what their own true value is.


Real economic success is directly tied to society in how they feel or are treated.  The actual conditions & not by mere wishful thinking, conditioning or stroking. - Duh?


Right now, many people feel betrayed gouged and manipulated by government & business ethics because of their present surroundings & conditions.  And, that's not a good indicator at all. IE:  Oil is what right now?  Where are fuel prices in comparison?  What was the past comparison?  Quality / standard of life?  Employment?  Grocery prices in general?  Housing? General stability?  High / low?  Bled dry by who & what for what?  Greed, ignorance?  Both?


Our national economic condition is directly tied to one of general welfare in a very general sense of other conditions.  Right now, the nations capitol can't get it's head out of it's collective whatever.  Leaders, supposed leaders, are acting like spoiled idealistic adolescent brats with little to no accountability.  Not a good sign.  It's no different than the average household, just on a larger scale.  What effects one, effects the other.  Sometimes in the same way & sometimes in different ways.


Until most people see those things for what they really are and correct them, the economy is not going to recover any time soon. UPS ideals or not.  Measuring commerce in certain ways only is not the only indicator of a true economic success when other things are so far out of synch is it?

Oct 25, 2011 7:05PM
Here on High Street twenty five businesses have closed, more then one hundred in the region are set to file bankruptcy, close to one hundred new home foreclosures in last weeks newspaper, another company has gotten rid of it's  long time older workers and those making good wages and benefits (right to work state Virginia)  should I go on, more homeless at feeding stations and churches including families, more folks (some with children)in mall and food store parking lots from here and other states seeking help, work crews cleaning highways are now entirely Mexican with most being illegals, no companies have taken the place of off-shored industries, no Wall Street or finacails investments...howeve​r Bank of America through a dummy company is buying up prime foreclosed properties and selling them to foriegners....should​ I continue...I do not understand the daily barrage of propaganda that says the economy is holding it's own or showing signs of improvement when the opposite is so much in evidence...did I mention inflation (food, manufactured items, clothing. medicine, medical care, energy and every thing else although gas has come down because people are not driving as much)....or the fact that another bank here was taken over by the Fed and two more are in trouble or.....incomes for most folks is falling or...and on and on...we just had our first citizen  Government and Wall Street protest and it did not even make the newspaper...over a hundred showed up
Oct 25, 2011 6:06PM

Recession->Recovery->Commodity Speculation->Inflation->Recession......Repeat.



Oct 25, 2011 6:01PM
Oil companies, banks, pick a sector. They're all bending us over. I liked to be kissed when I get screwed.
Oct 25, 2011 5:55PM
The nature of the economy is always measured around the Christmas holidays. Right JQ Public is broke. The biggest jolt to this index is if gas prices were already down to allow the public to have money to spend and reallocate the available dollars that are out there. That hasn't happened. Figures around the holidays will be bad.
Oct 25, 2011 4:33PM

Quote from JJ "now we are stuck with higher taxes to pay unsustainable pensions that these public sector teachers and cubicle workers think they are entitled to"


I AM entitled to my pension... I paid for half of it AND the state gov't FORCED me to get into this program. So YES I WANT MY MONEY!


Now... if they would've let me opt-out I would have. I need the money now rather than later AND once I get to the point where it's "extra" income (or as ALL govt calls it... including tea baggers... my disposable income) I would MUCH rather have the choice on how/where/when to invest.


I don't know why you people hate teachers so much. You should be thanking them. You can read this post and reply to it.

Oct 25, 2011 8:39PM
Well, UPS would feel all warm and tingly..... their Customer Service Dept has been out-sourced to SOUTH AMERICA.  Boycott this company until they bring those jobs back to the U.S.!!!!
Oct 25, 2011 5:19PM
Lots of opinions out there.  Up here in Boise, Idaho we are seeing an economy that is not recovering as fast as most would want. That said, lots of new housing subdivisions being built and more "sold signs."  From our view, the frustrating part is watching all of the banter out there about which political party will bring the economy roaring back.  From what I can tell, all of the Republican candidates are fixated on cut, cut, cut for the people making lower levels of income in favor of increasing tax benefits and favors to the wealthiest with no regard to the fact that their platform is exactly more of the same garbage that got this country into trouble under George Bush.  They cloak all of this under a cloud of fear, self righteousness and the sanctimony of guns and religion and whatever the Koch brothers want.  I am simply amazed how anyone classified as "lower and middle income" Americans could ever vote for any of the six idiots now running for President. 

That said, Democrats have not been bold and have not demonstrated the willingness to take whatever action needed to fix the economy.  Still, as an old Republican, I must say, until my party comes back to a sane centrist platform that is more inclusive of all Americans and truly becomes a party willing to work for the good of America, I have no choice but to support my President and hope that he wakes up and takes the bold action needed to fix our country.
Oct 25, 2011 6:34PM
I can tell you right now that Amazon is swamping UPS with packages shipped to their fulfillment centers. I do not know if that is a good indicator. It could mean that people are looking to save more money and avoid sales taxes by ordering through online retailers.
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