EDITOR'S NOTE: There’s something reassuring about hearing economic forecasts from those who are “on the ground,” so to speak, versus an analyst sitting on a comfy chair in an office. Is FedEx in a position to make a valid recession forecast? Of course, it is. They’re not the only transport company, but they’re a major global player. And as FedEx’s CEO Raj Subramaniam is right to point out, the company is a reflection of “everybody else’s business.” The company was expecting manufacturing activity to pick up after the pandemic lockdowns. That’s the news that everyone seemed to have been hearing. But FedEx’s earning revenues tell a more realistic story. The global economy is not picking up. Between inflation making consumer prices less affordable and central banks making the cost of borrowing money less affordable, there doesn’t seem to be much of a choice here, right?
- FedEx CEO Raj Subramaniam told CNBC’s Jim Cramer on Thursday that he believes a recession is impending for the global economy.
- The CEO’s pessimism came after FedEx missed estimates on revenue and earnings in its first quarter. The company also withdrew its full year guidance.
FedEx CEO Raj Subramaniam told CNBC’s Jim Cramer on Thursday that he believes a recession is impending for the global economy.
“I think so. But you know, these numbers, they don’t portend very well,” Subramaniam said in response to Cramer’s question of whether the economy is “going into a worldwide recession.”
The CEO’s pessimism came after FedEx missed estimates on revenue and earnings in its first quarter. The company also withdrew its full year guidance.
Shares of FedEx fell 15% in extended trading on Thursday.
“I’m very disappointed in the results that we just announced here, and you know, the headline really is the macro situation that we’re facing,” Subramaniam said in an interview on “Mad Money.”
The chief executive, who assumed the position earlier this year, said that weakening global shipment volumes drove FedEx’s disappointing results. While the company anticipated demand to increase after factories shuttered in China due to Covid opened back up, it actually fell, he said.
“Week over week over week, that came down,” Subramaniam said.
The chief executive also said that the loss in volume is wide-reaching, and that the company has seen weekly declines since around its investor day in June.
“We’re seeing that volume decline in every segment around the world, and so you know, we’ve just started our second quarter,” he said. “The weekly numbers are not looking so good, so we just assume at this point that the economic conditions are not really good.”
“We are a reflection of everybody else’s business, especially the high-value economy in the world,” he later added.
Originally published on CNBC.