FedEx has raised the lower end of its full-year profit and sales guidance, indicating that its efforts to cut costs and streamline its logistics and distribution network are yielding positive results as domestic demand in the U.S. continues to improve.
According to Zhitong Finance, the company known as the 'barometer of the U.S. economy' $FedEx (FDX.US)$ has unexpectedly raised the lower end of its full-year profit and sales guidance, indicating that its efforts to cut costs and streamline its logistics and distribution network are yielding positive results amid continued improvement in domestic demand in the United States. FedEx has long been regarded by analysts and investors as a 'barometer/indicator' of the U.S. and even the global economy. Thus, FedEx's stronger-than-expected performance and outlook undoubtedly highlight the increasing likelihood of the U.S. economy achieving a so-called 'Goldilocks-style soft landing' in 2026.
The global courier company stated on Thursday in an earnings release that adjusted earnings per share for the current fiscal year (FY 2026) will be in the range of $17.80 to $19, raising the lower bound from previous forecasts. The midpoint of this range is higher than the average Wall Street analyst estimate of $18.28 per share. In terms of the latest sales forecast, FedEx now expects sales growth for the current fiscal year to be between 5% and 6%, up from the previous forecast floor (which was 4%-6%), surpassing Wall Street’s average expected growth rate of approximately 4%.
FedEx is undertaking a major restructuring of its delivery network, merging its historically independent ground and air freight systems. A more optimistic outlook and second-quarter profits for FY 2026 significantly exceeding Wall Street expectations indicate that FedEx’s various reform measures are producing positive results as nationwide demand for express freight transport improves after a prolonged slump since the COVID-19 pandemic.
Investors have embraced this strategy — the company’s management expects it to result in $1 billion in permanent cost reductions during the 2026 calendar year. Over the past six months ending at the close of trading on Wednesday, FedEx's stock price surged approximately 26%, while its competitor $United Parcel Service (UPS.US)$ saw its share price increase by less than 2%.
The company stated in its earnings announcement that robust pricing growth, ongoing cost-cutting initiatives, and rising domestic package volumes in the U.S. have bolstered FedEx’s core transportation business. Earnings data showed that FedEx’s adjusted earnings per share for the second quarter ended November 30 were $4.82, significantly higher than $4.05 in the same period last year and also above Wall Street analysts’ average estimate of approximately $4.12.
In other performance metrics, FedEx’s total revenue for the second quarter was approximately $23.5 billion, representing a 7% year-over-year increase and exceeding Wall Street’s average forecast of about $22.9 billion. Operating profit under GAAP standards for the second quarter was approximately $1.378 billion, reflecting a substantial 31% year-over-year increase, surpassing expectations. GAAP net profit was approximately $956 million, marking a significant 29% year-over-year increase.
The second quarter often marks the beginning of the holiday shopping season, during which courier companies traditionally experience a surge in volume. Thus, FedEx’s performance during this period, along with its guidance for future performance, serves as a key indicator of whether consumer spending—a long-standing pillar of U.S. economic growth—is expanding strongly.
Notably, both UPS and FedEx were affected by the unexpected grounding of all MD-11 aircraft. Statistics show that the MD-11 is a mainstay model for global air cargo carriers; previously, in November, a UPS plane crashed near its hub in Louisville, Kentucky, resulting in 14 fatalities.
The MD-11 accounts for about 4% of FedEx’s fleet, undoubtedly exacerbating concerns about potential disruptions to peak-season delivery services. However, actual growth figures demonstrate that the company took proactive measures to mitigate the negative impact of the MD-11 in a strong demand environment.
The company has also been striving to overcome operational difficulties stemming from a decline in shipping demand following the COVID-19 pandemic, a trend that intensified earlier this year primarily due to erratic tariff policies implemented by U.S. President Donald Trump in his second term, which disrupted global shipping routes.
Barometer of the U.S. Economy
As FedEx's overall business operations span across retail, consumer, and industrial sectors, this courier company is often regarded as a 'barometer of broader economic growth' in the United States. As a key player in international express delivery and air freight, changes in FedEx’s shipment volumes and profit data on cross-border e-commerce, international exports, and critical routes (e.g., the key China-U.S. transport route) are frequently used to gauge global trade activity and shifts in supply chain dynamics.
FedEx’s network serves clients across retail, consumer, and industrial segments; any fluctuations in order placement, shipping, or inventory replenishment activities are quickly reflected in parcel volume, freight tonnage, and service structure. Therefore, the market often views its operational data as a high-frequency signal for gauging the vitality of the 'real economy.'
Goldman Sachs, the Wall Street financial giant, has repeatedly described FedEx and UPS as 'barometers' of the actual health of the U.S. economy, emphasizing their acute sensitivity to manufacturing output and industrial sentiment (a weakening manufacturing sector tends to suppress high-margin B2B volumes and expedited service demand).
FedEx stated that due to the ongoing volatility, adjusted operating profits will suffer a $1 billion impact from tariff policies, primarily because freight volumes from China to the U.S. have declined under the pressure of tariffs imposed by the Trump administration—this highly profitable transport corridor being particularly vulnerable to the negative impacts of such measures.
Goldilocks-style soft landing
FedEx’s robust earnings growth and upward revision of its outlook undoubtedly provide strong support for the narrative of a 'Goldilocks-style soft landing for the U.S. economy in 2026.' In the second fiscal quarter, FedEx reported an adjusted EPS of $4.82, with revenue increasing to $23.5 billion. It also raised its fiscal year 2026 revenue growth forecast to 5%-6% and lifted the lower end of the adjusted EPS range to $17.80-$19. These growth metrics and forecast adjustments typically indicate more stable performance in terms of demand, pricing (yields), and network efficiency across at least the retail/e-commerce and certain corporate shipping scenarios it covers, aligning with evidence of 'continued economic expansion without overheating.'
Morgan Stanley, the Wall Street financial giant, recently issued a research report stating that the OBBA (the so-called 'Big and Beautiful' Act), passed by the Trump administration in 2025, will strongly drive economic growth effects starting in 2026. Additionally, the price increases caused by Trump’s tariff policies will eventually be proven to be temporary inflationary disturbances until short-term inflation gradually dissipates. Meanwhile, tech giants like Google are aggressively advancing the construction of AI data centers centered on AI computing power infrastructure. Collectively, these factors will propel the U.S. economy into a macroeconomic environment characterized by a 'Goldilocks-style soft landing' in 2026.
Therefore, Morgan Stanley characterizes 2026 as a 'broad stock market bull market under rolling recovery,' advocating for a return of market risk appetite 'from point to surface' along with the upward resonance of multiple cyclical industries.
The various economic data for 2025 released prior to the U.S. government shutdown also pointed to a 'Goldilocks' scenario. Although the non-farm labor market weakened, the combination of upward consumer spending from January to August 2025, PCE in line with expectations, and upward revisions to GDP indeed increased the subjective probability of a 'Goldilocks' macroeconomic environment: moderate growth, no overheating inflation, and market expectations leaning towards a 'rate-cut-friendly' low-interest-rate trajectory.
The so-called “Goldilocks” macroeconomic environment in the United States refers to an economy that is neither too cold nor too hot—just right—maintaining moderate “gentle growth” in GDP and consumer spending alongside a long-term stable “moderate inflation trend,” while benchmark interest rates follow a downward trajectory. Overall, Morgan Stanley expects the U.S. economy to gradually emerge from a state of high uncertainty in 2026, returning to this positive track of “moderate growth.”
Morgan Stanley noted that 2025 is a year marked by tariff policies, tightened immigration controls, and the intensive implementation of the Trump administration’s tax cuts and fiscal bill (One Big Beautiful Bill, OBBBA). Analysts anticipate that by 2026–2027, the broader framework of pro-growth policies will largely settle, shifting the U.S. economy's focus from 'policy disruptions' to how businesses and households adjust their spending under an environment of tax cuts from the OBBBA and restored consumer confidence driven by the Trump administration.