My friend and sometimes colleague Mark Perry, whose Carpe Diem economics blog and Twitter feeds are worth bookmarking, is guardedly optimistic about the economy. He’s three doors down the hall at AEI from James Pethokoukis, from whom you can get the ominous news every day, so it’s a short walk to adjust your mood depending on whether you need cheering up or a slap of cold reality. Mark points to a number of encouraging signs of increasing manufacturing activity and especially housing markets that are rebounding fast. However, he doesn’t think there’s going to be any kind of significant economic recovery before the fall, or that unemployment is likely to decline very much.
One of my favorite indicators, mentioned here back in March, is the FedEx indicator, and it is flashing bright yellow right now. The package shipping business is a highly sensitive indicator of aggregate decisions across the economy. Yesterday the Wall Street Journal updated the FedEx indicator with the headline: “FedEx Signals Economic Woe.”
A glance at sales and income from previous downturns shows how sensitive FedEx is to economic growth. Not only is FedEx the kind of company that catches a cold when the world economy merely sneezes. It is also the type that gets the sniffles when the data still give the economy a clean bill of health. . .
The story notes that FedEx is retiring 24 more planes ahead of schedule, suggesting that even with falling fuel prices, FedEx doesn’t need the capacity.
[F]reight trends suggest a clear slowdown in Europe and a nascent one in Asia [and] may even be accompanied by a braking in the domestic market. Analysts at Credit Suisse note that April freight volumes in the U.S. fell 11% from March; typically the month sees an about 4% decline.
UPDATE: Today’s Journal offers this headline: “Steelmakers Gird for a Downturn.”
NEW YORK—The steel industry faces its worst prospects in four years, with prices and demand falling, prompting a call by industry executives to cut costs and shut unprofitable mills.
The gloomy outlook mostly reflects the European crisis and slowing construction in China. It represents a sharp contrast from earlier this year when, buoyed by the automotive and energy-extraction industries, steelmakers were able to push through price increases and step up production.
I’m sure Obama-Biden will tell us that prosperity is just around the corner.