It was probably an accident, but the Associated Press's headline writers, in framing the wire service's story about Fedex's quarterly results and economic outlook released earlier today, created a headline that the Obama administration will find completely unhelpful: "FEDEX SAYS ECONOMY IS STALLING, CUTS OUTLOOK."
Most U.S. readers and probably most of AP's subscribing print, online, and broadcast outlets will, if they only see the headline, believe that it primarily refers to the U.S. economy. Meanwhile, AP Business Writer Samantha Bomkamp, with the help of Martin Crutsinger, mimicked Fedex's odd spin on its result, making sure that those who bothered to get to the verbiage understand that the company believes that the world economy is what is really stalling by using the word "global" five times in her first five paragraphs. The trouble is that if one looks at the company's revenue in detail, it's clear that that the bigger slowdown is actually occurring in the U.S (the company's press release, which has a link to the longer PDF release, is here).
This is not good news:
Even as we've been told time and again by the U.S. press that it's Europe and other areas of the world where the slowdowns are taking place while the U.S. economy is still holding its own, Fedex's U.S. package revenues fell by 3.0% from the same quarter a year ago (that's at least 5% in real terms), while international revenues excluding International Domestic (because the year-over-year numbers aren't truly comparable) fell by 2.3%.
Here are a few paragraphs from Bomkamp's report:
... FedEx on Tuesday cut its outlook for global growth and industrial production while slashing the forecast for company earnings. And CEO Fred Smith suggested trade has slowed to levels seen during the last two significant economic downturns.
It's more evidence that the global economy has a way to go to a full recovery. Several countries in Europe are in recession and the U.S. is struggling with high unemployment and weaker manufacturing growth. And Smith said some experts have underestimated the severity of the slowdown in exports from China, where FedEx has invested heavily over the last several years, adding new planes to export goods and expanding its hubs and network.
FedEx's forecasts are closely watched for signals of future economic health. Its results provide insight into the global economy because of the number of products it ships and the number of countries in which it does business. Bigger rival UPS said in July that it expects the global economy to get worse before it gets better. UPS also cut its earnings forecast.
Note the (over)emphasis on "global" problems.
Perhaps (emphasis perhaps) even more ominously, UPS's financials for the quarter ended June 30 just two months earlier showed modest year-over-year U.S. revenue gains but international revenue declines. Though they are in the same general line of business, Fedex and UPS's revenue components are very different. Nevertheless, the contrast in the two companies' results just two months apart is enough to make one wonder if there has been more fundamental deterioration in the U.S. economy than the Obama administration and the nation's establishment press have been willing to acknowledge.
Cross-posted at BizzyBlog.com.