The economy has chimed along nicely ever since it recovered from the COVID-19-induced downturn in 2021. Despite hard data pointing to fairly robust growth, a section of the economists have been sounding out recession warnings. On Wednesday, David Rosenberg, founder of Rosenberg Research & Associates, repeated his assertion of an imminent recession, backing his prediction with a data point.
What Happened: Posing a question as to “where is recession,” apparently taking a potshot at recession-deniers, Rosenberg said, “I’ll tell you where it is. It’s in the UPS earnings release.”
The economist was referring to the fourth-quarter earnings report from shipping giant United Parcel Service, Inc. (NYSE:UPS) released Tuesday. The Atlanta, Georgia-based company reported fourth-quarter revenue that fell 7.8% year-over-year to $24.9 billion. The revenue decline reflected daily shipping volume reductions of 7.3% in the U.S. and 8.3% in Europe,
Adjusted earnings per share fell a steeper 31.8% to $2.47.
Commenting on the earnings, CEO Carol Tomé said, “2023 was a unique and difficult year and through it all we remained focused on controlling what we could control, stayed on strategy and strengthened our foundation for future growth.”
The company guided 2024 revenue to $92 billion-$94.5 billion and adjusted operating margin to 10%-10.6%.
For the full year 2024, UPS expects revenue of $92 billion-$94.5 billion and consolidated adjusted operating margin of about 10%-10.6%. The revenue guidance for the year was slightly below the estimates of most analysts.
Tomé said on theearnings callthe company is reducing workforce by about 12,000 positions in a bid to save $1 billion in costs in 2024. The company also said it plans to explore strategic alternatives for its truckload brokerage business, Coyote, reasoning that it was a highly cyclical business with considerable earnings volatility.
Rosenberg suggested the strong GDP growth reported for the two recent quarters doesn’t look credible. “As in, contraction in shipping volumes. It is now really tough to buy into that Q4 government-massaged GDP data,” he said.
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