LIVE MARKETS-US consumer travel slowdown may be a warning

Reuters
01 Apr
LIVE MARKETS-US consumer travel slowdown may be a warning

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US CONSUMER TRAVEL SLOWDOWN MAY BE A WARNING

U.S. consumers are pulling back on domestic travel with a weaker start to the year than in the previous two years, which may offer a warning for the sector and for the economy, according to David Tinsley, senior economist at Bank of America Institute.

The U.S. travel and tourism industry accounts for around 3% of gross domestic product and more than 6 million jobs, Tinsley said, citing Bureau of Economic Analysis data. The biggest demand by far for U.S. tourism comes from domestic consumers, even though international tourists also support the sector.

Bank of America aggregated card data shows softer lodging, tourism and airline spending this year. Tinsley cites several factors as potentially explaining the shift including bad weather and a later Easter compared to previous years. Demand in recent years has also been boosted by pent up demand following COVID, which has now likely played out.

Overall, Tinsley notes that the labor market remains strong, which means that tourism spending may be facing a yellow light, rather than a red one. But the drop in consumer sentiment measures also suggests that households may be coming more reticent to plan big trips in the near-term.

“We need to keep a close eye on this important part of consumer discretionary spending moving forward,” he said.

(Karen Brettell)

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