Today’s advance estimate of third-quarter economic growth from the Department of Commerce is overall good news for the travel industry—but U.S. Travel economists urge caution around international travel numbers.
In its advance estimate released earlier today, the Department of Commerce reported that the U.S. economy grew at a seasonally adjusted annual rate of three percent in the third quarter of 2017, which closely mirrored its 3.1 percent increase in the second quarter. This is the first time in exactly three years) that this pace has been achieved over two consecutive quarters (the last time was in Q2 and Q3 of 2014).
While this estimate will be revised in coming months when more data becomes available, today’s report is generally good news for the travel industry.
Consumer spending on travel-related products—such as transportation services, recreation, food services and accommodation—increased at an annual rate of 2.9 percent in the third quarter, compared to a 0.2 percent increase in Q2 of 2017. This is also faster than the 2.4 increase in overall consumer spending last quarter. In fact, travel-related consumer spending has outpaced overall consumer spending three out of the past five quarters.
Today’s report also showed that spending by international travelers in the United States increased at an annual rate of 6.3 percent in the third quarter—more than double the 2.3 percent growth seen in overall U.S. goods and services exports last quarter.
Still, caution against excessive optimism toward international travel growth is warranted.
For one thing, all indicators point to education as the driver of the bulk of international travel spending growth; this is distinct from business and leisure travel spending. For another, given Commerce’s recent monthly estimates indicating a decline in international visitation to the U.S. during the first half of the year, the figures in today’s report stand a strong chance of being revised downward in coming months.
Various indicators continue to show a conflicting and murky picture of the true state of international travel, and economists are awaiting the typical moment when the numbers align.
However, given the travel industry’s critical role in job creation and export growth, this advance report of overall accelerated travel activity in the U.S. should be welcome news for all those concerned with the health of our country’s economy.