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Updated from 10:26 a.m. EDT



reaffirmed profit expectations for the current quarter and offered a steady-as-she goes economic forecast that could assuage jitters about slowing growth.

The Memphis, Tenn., shipper says it still expects earnings per share of $1.40 to $1.50 for its fourth quarter, which ends May 31. The average Wall Street EPS estimate is $1.48, according to Thomson First Call. FedEx handily beat Wall Street estimates in its third quarter.

"FedEx continues to see steady economic growth across the U.S. and internationally," said Frederick W. Smith, FedEx's chairman and CEO, in a press release Thursday. "The overall strength of the economy, and in particular the strength in the manufacturing and wholesale sectors, should continue to benefit FedEx going forward."

Later, at an investor conference in New York, Smith said the U.S. economy was entering a mid-cycle economic environment where inflation and costs will rise gradually.

Manufacturing and wholesale activities continue to expand, Smith said, while a steady improvement in labor and income will support continued growth in the consumer sector. Although higher energy and other commodity prices may have a negative impact on investment and consumption decisions, Smith said there's a good change energy prices will moderate.

Economic indicators have pointed to a slowdown in March, prompting some market observers to worry that more sluggish growth might be ahead. But Smith suggested it probably was just a quick inventory correction followed by a return to longer-term trends.

Because of improved transportation and communication systems, businesses today have much clearer visibility into their supply chains, allowing them to instantly adjust inventories to brief slowdowns in demand, Smith said. The current quickness of such corrections is something that many macroeconomic forecasters miss, he said.

FedEx shares fell $1.10, or 1.3%, to $86.50 by midafternoon Thursday.

On Wednesday, rival



reaffirmed its full-year earnings forecast, saying U.S. domestic package volume is ahead of expectations in the second quarter, while international volume is increasing at a double-digit rate.