It is not particularly surprising that a major shipping company would disclose that the holiday season will be its busiest. FedEx already has. On the other hand, the fact that many Americans still believe the economy has not recovered from the recession might make the chance of an all-time record holiday level unlikely. United Parcel Service Inc. (NYSE: UPS) claims otherwise, and this might be a sign that fourth-quarter gross domestic product (GDP) will be strong.
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The company’s report, “UPS Ready for 2014 Peak Season, Forecasting Record Holiday Deliveries“:
As the holiday shipping season approaches, UPS (NYSE: UPS) is ready to handle this year’s anticipated volume of more than 585 million packages in December – an 11 percent increase over 2013. This estimate is included in UPS 2014 earnings guidance. The anticipated 585 million packages, if set side-by-side and based on 1 cu. ft., would circle the Earth nearly 4.5 times.
UPS expects its 2014 peak delivery day to be Monday, Dec. 22, when the company plans to deliver more than 34 million packages worldwide. Six days are likely to surpass last year’s single-day delivery record of 31 million packages. By comparison, UPS delivers approximately 17 million packages on an average day.
ALSO READ: Retailers Hiring the Most Employees for the Holidays
There are several possible causes for the potential record. One is that retailers have dropped prices for the holiday, triggering demand. Another is that because of the gains of e-commerce, fewer Americans will shop in physical stores. More people will rely on gifts bought from sources like Amazon.com.
The most favorable conclusion, at least as far as the economy is concerned, is that Americans have started to open their wallets in a way they have not since 2007. Gallup expects a modest rebound:
Americans’ initial estimates of the total amount they will spend on Christmas gifts this year point to an above-average holiday season for the nation’s retailers. While Gallup’s October spending forecast is a warm-up to its key measure in November, it finds Americans expecting to spend $781, on average, up from $704 last November.
The National Retail Federation’s management believes likewise:
After a turbulent start to 2014, the National Retail Federation announced today it expects sales in November and December (excluding autos, gas and restaurant sales) to increase a healthy 4.1 percent to $616.9 billion, higher than 2013’s actual 3.1 percent increase during that same time frame.
The analysis from NRF and Gallup researchers points to a better economy as the reason for overall improvements this holiday. If so, there are signs GDP will improve sharply in the fourth quarter.
ALSO READ: FedEx Predicts Record Holiday Season Shipments
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