ATLANTA (
TheStreet) -- Remember the days investing in emerging economies was all the rage?
Now the world's hot economy appears to be right here in the U.S., judging from various fourth-quarter results in the transportation sector, from airlines to autos to overnight shipping. "The U.S. is one of the few economies where expectations are greater than last year,"
UPS CEO Scott Davis said Tuesday.
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| Ford, United and UPS are all seeing strength in the U.S. economy.
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"We certainly are seeing a better U.S. economy than we would have thought in August and September, when people were talking about a chance for a second recession," Davis said during the company's fourth-quarter earnings call. "It has stayed fairly strong, although I wouldn't call it a
robust economy right now."
It is better, however, than Europe, with its troubled outlook, or
Asia, where intra-country trade is strong but U.S. exports are slowing. "Asia ended up being a little slower than we anticipated, most notably on the Asia to U.S. lane," CFO Kurt Kuehn said. "We reduced capacity by about 10% over the last couple of quarters."
FedEx has also been cutting back its Asia-U.S. air capacity.
UPS results are considered an important economic indicator because, at any moment, 6% of U.S. GDP is in the UPS system. Auto sales, meanwhile, are considered to be an important indicator of consumer sentiment, given the amount of spending and consumer commitment involved in a purchase.
Last week,
Ford . reported strong domestic fourth-quarter performance, in contrast to its performance elsewhere. The automaker said it underperformed in every region of the world except for North America, where it reported a pretax profit of $889 million, up from $670 million a year earlier.
Ford lost money in Asia and Europe and its earnings fell in South America. In Europe, the automaker reported a pretax operating loss of $190 million, compared with a loss of $51 million a year earlier, due largely to higher material costs. In Asia, Ford reported a pretax operating loss of $83 million, compared with a year-earlier profit of $23 million, reflecting the impact of Thailand flooding as well as higher costs. In Latin America, Ford reported a pretax operating profit of $108 million, compared with a profit of $281 million a year earlier, due to unfavorable exchange rates and higher commodity costs.
Similarly,
United Continental Holdings , the world's largest airline, said fourth-quarter domestic revenue per available seat mile, a common airline industry metric, far exceeded results in the Atlantic and the Pacific, the airline's primary international regions.
Improved consumer confidence is benefiting the U.S. economy, but a pickup in e-commerce may have provided added fourth-quarter stimulus for
UPS and FedEx, says Rob Pickels, industrials analyst at
Manning Napier, which managed about $42 billion in assets as of Oct. 31. Pickels said data from the domestic trucking industry also showed fourth-quarter strength.
"It was a strong holiday season," he said. "Part of what's going on at UPS and FedEx in the fourth quarter was e-commerce. The shift to e-commerce has really accelerated recently, and they benefit from that, although it's a little bit less indicative of the broad economy."
On the airline side, Pickels said, "the domestic demand environment is better than people expected," and domestic pricing "is strong because that's where most of the capacity cutting has occurred." In international markets, with the exception of the trans-Atlantic, "most airlines are adding capacity or shrinking less than in domestic markets."
-- Written by Ted Reed in Charlotte, N.C.
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Ted Reed
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