The Busiest Shopping Day in History

FedEx (NYSE: FDX) expects December 12 to be the busiest day in its history, as far as shipments through its system are concerned. That is one more sign that the consumer has attained a level of optimism not seen for three holiday seasons. And it is a sign that GDP may explode upward in Q4.

According to FedEx, predicting December 12 volume:

Company forecasters expect FedEx will move approximately 17 million shipments — almost double its daily average volume — through its global networks on that day.

As e-commerce becomes a larger portion of retail spending, and more retailers offer free shipping as a way to draw customers, shipping volumes should continue to increase year after year. FedEx may make hundreds of millions of dollars based on the trend. But retailers could lose money as the costs of free shipping erode their margins — or may turn them negative. But the consumer is out in force, and he does not care whether or not stores, online or bricks-and-mortar, make money.

Only two months ago, economists expected GDP growth in the fourth quarter would be little better than 2%. High employment, a lack of increase in real wages and a possible end to unemployment insurance at year-end for 1.7 million people should have kept shoppers away from stores. Shoppers, however, have rushed into retail establishments. Experts do not know why these people have had such a rapid change of heart. The improvement, however, could lift GDP to 3% growth, or higher, for the final three months of the year.

One reason people may have increased retail activity is that they have paid down a large part of their consumer debt from three years ago, when they were highly leveraged. They now have more access to money from their savings accounts or from credit cards. This will push them back into a leveraged position next year, but many do not seem to care.

The momentum could roll into next year. Unemployment could improve, although not rapidly. The value of homes could improve,  even though they will not recover to the 2005/2006 peak for years. Somehow, the consumer economy has returned to a fairly healthy state. That optimism may continue into 2012 — for some reason.

Douglas A. McIntyre