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MARCH 2019: ECONOMIC OVERVIEW

Has the economic recovery peaked? As expected, the economy slowed down in the fourth quarter of 2018 to a moderate 2.4 percent growth. Unexpected, however, was the dramatic drop in consumer spending, business investment and the December trade balance.

  • Despite the fall of consumer spending in December due to some rough retail sales numbers, consumer confidence rebounded in February, bringing hope that the consumer will remain the engine of economic growth across 2019.
  • The labor market decelerated hiring to a near-halt in February, but the unemployment rate shrank to 3.8 percent and increases in the average hourly wages provided robust silver linings.
  • The trade deficit (in goods) reached an all-time high, with exports plunging in December. However, the travel trade surplus remained robust and a possible respite from recent U.S. trade disputes could provide greater clarity to exporters and foreign consumers.

In light of this new information, first-quarter GDP forecasts for 2019 have been revised down to a flat 0.4 percent growth. While somewhat disappointing, economic forecasts point to the U.S. finishing the first act of a well-worn “slow first quarter, fast second quarter” economic pattern seen throughout the recovery.

CURRENT STATE OF THE ECONOMY

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Consumer Confidence

Consumer Confidence rebounded strongly in February, turning in a reading of 131.4 points, according to the Conference Board. The Consumer Confidence Index gained 9.7 points from January, following three consecutive months of decline.

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State of Business

Business investment recovered slightly from a disastrous December, according to estimates from the Census Bureau. Core durable goods orders increased 0.8 percent month-over-month (m/m) in January, after a 0.7 percent m/m contraction in December.

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Consumer Spending

Consumers ended 2018 with a whimper, with both personal outlays and retail sales numbers down for the month of December 2018. Personal consumption expenditures (PCE) finished the year by contracting 0.5 percent month-over-month (m/m) from November.

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Travel Trends Index

Travel to and within the U.S. grew 3.2 percent year-over-year in January, according to the U.S. Travel Association’s latest Travel Trends Index (TTI)—marking the industry’s 109th straight month of overall expansion.

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Labor

The February jobs report landed with a thud: only 20,000 jobs were estimated to have been added, well below market expectations of 180,000. Some of February’s weak job growth might have been a response to strong hiring in previous months.

TRAVEL INDUSTRY UPDATES

Consistent themes American travelers are interested in in 2019 include a desire to tune out and reconnect, get outdoors and make memories whether alone or with the whole family. While the lodging and airline industry predict continued growth, it will be subdued for the next year or so.

Domestic Travel

The latest U.S. Travel Barometer reported that 83 percent of U.S. residents searching for lodging in February searched domestically. Mexico captured 3 percent of U.S. resident searches in February—indicating stronger demand for U.S. residents traveling abroad.

International Travel

The U.S. remains the world’s largest travel and tourism economy ($1.6 trillion, 7.8 percent of U.S. GDP) despite the flat growth of Chinese travel to the U.S. last year, according to research from the World Travel & Tourism Council (WTTC).

Lodging Industry

U.S. hotel performance kicked off 2019 on a high note, according to STR. January 2019 estimates show a 54.8 percent occupancy rate, an average daily rate of $124.39 and revenue per available room at $65.18.

Transportation

At $2.47 per gallon, the average national gas price crept up by five cents per gallon in the beginning of March, 20 cents more than a month ago, but remains 5 cents lower than average price one year ago, according to AAA.

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Member Webinar Series

Join Director of Industry Communications Sarah Shields and Manager of Digital Communications Nikki Carpenter on Tuesday, April 23rd at 2pm for a preview of #nttw19 and the resources available as you plan for this year’s theme—Travel Matters.

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U.S. Travel Updates

The Domestic Travel Market Report, 2018 Edition was recently released. This annual report offers insights on domestic travelers' characteristics including: primary trip purpose, accommodation preferences, changes in travel party composition and the top trip activities.

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