The Summer Outlook
People haven’t quenched their thirst for travel. Demand continues and people are prioritizing experiences, but not everything is puppies and rainbows. Heading into the busy season, let’s look at the bright spots and stock up on sunscreen… but pack a rain poncho (just in case).
Experiences Win
Consumers are spending more on experiences and outings rather than goods. A Mastercard SpendingPulse report showed consumers spending 42% more on lodging, 15% more on airlines, and 14% more on restaurants compared to the same month last year. And while rising prices could be causing the increase, travel budgets are being protected above other discretionary items, according to Skift. People are feeling more comfortable returning to restaurants and live events. Morning Consult reported that 3 in 5 adults feel comfortable attending sporting events and concerts. Attendance at NBA and NFL games was up this season, with the NFL reporting a 3% increase and the NBA setting records for attendance and sellouts. MLB’s attendance also looks promising.
In the Air
The Transportation Security Administration predicts that summer air travel will surpass pre-pandemic levels. Airlines and booking companies report a significant uptick in reservations and flight searches.
The downside? Travelers still find getting to where they are going a hassle, with surging flight prices and memories of last summer's cancellations and lost baggage disasters. The aviation infrastructure did not magically get repaired over the winter. And then there’s the uncertainty and drama around pilots’ negotiations with their employers. The union representing American Airlines pilots authorized a strike, and Southwest pilots are currently voting. An actual work stoppage is uncertain and would likely be months away, but picketing by the pilots is already underway at many airports.
On the Road
While still arguably high, gas prices are about 65 cents cheaper than this time last year. Predictions indicate prices will be lower than last summer. Does this mean people are packing the car and hitting the road? A survey by The Vacationer showed that 39% of American adults plan to take a road trip longer than 250 miles from home.
Unemployment
The job market is trucking along. The unemployment rate sits at 3.4%. Employers continue to create jobs, adding 253,000 jobs in April. Leisure and hospitality jobs grew by 31,000 in April but remained 400,000 jobs short of pre-pandemic levels. Many who left the workforce during the pandemic due to retirement, lack of childcare, and health concerns have returned, with 83.3% of workers aged 25-54 back in the labor force. And the Black unemployment rate, typically twice the White unemployment rate, fell to a record 4.7% low in April.
The Debt Ceiling
U.S. Treasury Secretary Janet Yellen told lawmakers that the Treasury could not pay its bills as early as June 1 without an increase in the federal debt limit. That date may be extended due to delayed tax collections, but there’s no guarantee. What happens if the debt ceiling isn’t raised? A mess. The government would need to cut spending significantly, the financial markets would go into turmoil, and interest rates would spike, among other effects. The threat could significantly impact visitor spending this summer, particularly those who rely on social security payments, federal workers, and military members. Everyone agrees that the U.S. defaulting on payments is not a great solution, but as always, there’s a difference of thought on how it should be handled. But don’t panic yet: Congress and the President are meeting in hopes of resolving the issue, and Congress has modified the debt ceiling 78 times since 1960, preventing a crisis.
Sunny with scattered sprinkles
Although there are potential obstacles, the summer is likely to be a busy season for attractions due to continuing demand. It’s important to monitor the evolving situation and adjust. But let’s keep the sunscreen handy and have a great summer!
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