Unleashing Pent-up Travel Demand
Around 48 million Americans are expected to travel 50 miles or more this weekend, according to the American Automobile Association (AAA).
The overall number of travelers will be 2.5 percent below the national record set in 2019. However, the number of people traveling by car is expected to set a new record. AAA anticipates 43.6 million Americans will be on the road. That is five percent more than in 2019.
Looking ahead, travel site The Vacationer says a whopping 81 percent of adults (208 million) will be on the road or in the air this summer. Of that number, over 56 percent are traveling this weekend.
Pandemic Liberation
After a couple of years of Covid lockdowns, pent-up restlessness is pushing more Americans to travel.
This year, according to AAA, 40 percent more people will be traveling than last year.
“Travel is in full swing this summer, as Americans eagerly pursue travel opportunities they’ve deferred for the last year-and-a-half,” said Paula Twidale, senior vice president, AAA Travel. “We saw strong demand for travel around Memorial Day and the kick-off of summer, and all indications now point to a busy Independence Day to follow.”
Inflation Factor
Rising travel prices, such as gas, food, and hotels, have not hampered travel expectations, However, inflation has altered some plans.
Almost half of the respondents to The Vacationer’s survey say gas prices will not affect their travel plans.
“Higher gas prices won’t deter road trippers this summer. In fact, we’re expecting record-breaking levels of car travel this July Fourth,” said Jeanette C. McGee, AAA spokesperson. She adds that travelers may compensate for higher prices by eating out less and seeking more free activities.
Gas Prices
After topping $5 a gallon on June 13, gas prices have steadily declined. At the time of this writing, the average price for a gallon of regular is $4.842. The drop in prices at the pump has moved in tandem with the drop in crude oil prices. Crude has decreased by about $3 a barrel over the last three weeks.
Although gas prices are trending lower, there are signs that we are experiencing the calm before the storm.
The elements making for the perfect price storm include the war in Ukraine, declining domestic oil reserves, and the failure of oil producers to increase production.
OPEC Plus agreed to increase production last month after extensive White House cajoling and pressure. However, American oil companies have not joined in.
President Biden has been critical of American oil companies.
“Amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain,” Biden wrote oil company executives in mid-June.
After noting that many factors contributes to production decisions, Biden noted that “. . . at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable.”
Median Rent Hits New High As Home Ownership Becomes More Difficult
Rising prices and mortgage rates have made the cost of owning a home prohibitive for many. If that was not bad enough, the cost of renting a house or apartment has hit an all-time high. The median cost of residential rent now exceeds $2,000 a month.
Most Americans Priced Out
The Harvard Joint Center for Housing Studies (JCHS) and an unrelated survey by real estate firm Redfin report a rapid rise in rents in the first quarter of this year.
The JCHS findings are published in a report entitled The State of the Nation’s Housing 2022.
“At today’s prices, the typical downpayment that a first-time buyer would need for a median-priced home is $27,400,” says Alexander Hermann, a Senior Research Analyst at the Center. “Without help from family or other sources, this would rule out 92 percent of renters, whose median savings are just $1,500.”
Record high appreciation rates have been recorded in 67 out of the top 100 housing markets in the nation, according to the JCHS. In addition, the report says rents have increased an average of 12 percent this year. While some markets have escalated even higher,
Rents Exceed $2,000
Redfin’s data mirrors the JCHS findings. It is Redfin that reports median monthly rents are at $2,002.
The real estate firm reports that rents were up an average of 15 percent year over year in May. What’s more, some markets are well above that. Cincinnati, Seattle, and Nashville all have seen 30 percent increases. At the same time, rents in Austin have jumped 50 percent.
“More people are opting to live alone, and rising mortgage interest rates are forcing would-be homebuyers to keep renting,” says Taylor Marr, Redfin deputy chief economist. “These are among the demand-side pressures keeping rents sky-high. While renting has become more expensive, it is now more attractive than buying for many Americans this year as mortgage payments have surpassed rents on many homes. Although we expect rent-price growth to continue to slow in the coming months, it will likely remain high, causing ongoing affordability issues for renters.”
Looking Ahead
New construction for single-family houses topped 1.1 million last year for the first time in 13 years, the JCHS report shows. Furthermore, multifamily construction topped a 30-year high in 2021.
The ongoing construction of homes and apartments is expected to ultimately lower or slow the increases in new home prices and rents, according to the JCHS study.
Knowing A Recession When You Are In One
Some people think we are headed for a recession. Others think we are in one. Still more people think we can avoid a recession. However, recessions are unavoidable and regular occurrences.
Remember The Last Recession?
The word recession is an economic boogie man to a lot of people. It conjures up all sorts of fears that usually accompany the unknown. It is a faceless monster lurking in the shadows waiting to pounce and devour your savings, kill your job, rob you of your home, and take the food off your table,
But, wait. You made it through the last recession. You can make it through the next.
If you think you have not lived through a recession, just look back to the pandemic. That was a recession.
Great Recession
In fact, you probably lived through the one before that. It has become known as The Great Recession. That financial downturn started with the collapse of the housing market due to low-interest rates and negligent regulation.
Lasting from December 2007 to June 2009, the Great Recession was the longest since World War II. In fact, since that time recessions have averaged 11.1 months duration.
Recessions are relatively short-lived today because of measures taken in response to the depression. For instance, the Federal Deposit Insurance Corporation (FDIC) now guarantees the money in your bank account is safe – even if the bank goes under.
Conclusion
Recessions are a natural part of the business cycle. We have had 11 since 1948 averaging one about every six years. That is a 70+ year trend, so get used to it.
Instead of building anxiety over a recession, we need to build financial reserves. With an emergency fund, you are better able to deal with any setbacks a recession might hand you.
Another strategy for dealing with a recession is to pay down credit card debt. The average credit card APR exceeded 17 percent this week, according to creditcards.com. Paying off a card with 17 percent interest is a net gain in your budget of 17 percent. What investment is going to give you a return like that?
And, remember — this too shall pass.
Read More:
Use These Apps to Save Money on Gas
4 Ways We Save Money With Cross Country Travel
Holiday Travel Any Time of the Year
Come back to what you love! Dollardig.com is the most reliable cash-back site on the web. Just sign up, click, shop, and get full cashback!
Max K. Erkiletian began writing for newspapers while still in high school. He went on to become an award-winning journalist and co-founder of the print magazine Free Bird. He has written for a wide range of regional and national publications as well as many on-line publications. That has afforded him the opportunity to interview a variety of prominent figures from former Chairman of the Federal Reserve Bank Paul Volker to Blues musicians Muddy Waters and B. B. King. Max lives in Springfield, MO with his wife Karen and their cat – Pudge. He spends as much time as possible with his kids, grandchildren, and great-grandchildren.
Comments