FedEx CFO: We'll hire more workers, if tax reform lifts GDP
FedEx (NYSE:FDX), the world’s largest express transportation company, is ready to hire more workers, that’s if the tax reform does what it is designed to do.
“U.S. GDP could increase materially next year as a result of U.S. tax reform. If this occurs, we would likely increase capital expenditures and hiring to accommodate the additional volumes triggered from this incremental GDP growth,” said Alan Graf, FedEx’s executive vice president and chief financial officer, during the company’s earnings call.
Currently, the company is forecasting global growth will hit 3% in 2018, with U.S growth at 2.5%, the best levels since 2011. These figures could be revised higher.
Wednesday the House gave the final seal on tax reform, the bill now heads to President Trump's desk.
We are delivering HISTORIC TAX RELIEF for the American people!#TaxCutsandJobsAct pic.twitter.com/lLgATrCh5o
— Donald J. Trump (@realDonaldTrump) December 20, 2017
FedEx isn’t the only voice of optimism when it comes to an improving economy on the heels of tax reform. If the tax plan is enacted permanently it could potentially lift U.S. GDP to 4.7% over time, according to the Tax Foundation, while also creating 1.6 million new full-time jobs.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| FDX | FEDEX CORP. | 292.29 | +0.40 | +0.14% |
| XTN | SPDR® S&P® TRANSPORTATION ETF - USD DIS | 91.37 | -1.23 | -1.33% |
What’s more, the U.S. economy is already on the uptick. GDP rose a better-than-expected 3.3% in the 3Q, according to the Commerce Department’s latest read. While about 1.9 million jobs have been created since President Trump took office, as tracked by the Labor Department.
FedEx is already benefiting from some of that growth, including what is another record holiday-shipping season, as described by FedEx CEO Fred Smith. The company boosted its forecast for 2018 and now expects to earn as much as $13.30 per share vs. the $12.80 high-end of the original forecast.
Investors are buying into the growth optimism. FedEx shares are hovering near a record, up 30% this year. Dow Transports, a barometer of future economic growth, are also trading at record levels, up 16% this year.