Millions of Americans have taken to the skies, hit the road, fired up the barbecue grill and jumped into the pool this weekend to celebrate the start of summer 2024. Analysts are expecting the Memorial Day weekend to usher in yet another summer of strong consumer spending on travel and other leisure activities.
The season is already off to a solid start: The Transportation Security Administration said that Thursday was its second-busiest day at airports in history, adding that five of its 10 busiest days ever were this month. AAA projected earlier this month that 43.8 million Americans are driving at least 50 miles this weekend, up 4% from last year’s total and close to the all-time record of 44 million during the 2005 Memorial Day weekend.
“We haven’t seen Memorial Day weekend travel numbers like these in almost 20 years,” Paula Twidale, senior vice president at AAA Travel, said in a release.
Royal Caribbean’s first-quarter earnings results topped expectations, thanks to strong bookings and robust onboard spending. Company executives said in a earnings call that they’re optimistic for the remainder of the year.
If this momentum persists throughout the summer, that would mean solid revenue for leisure businesses such as Royal Caribbean, hotels, restaurants and theme parks, also providing an economic boost to cities with a big tourism scene.
A Bank of America Institute analysis released last week expects that to be the case.
In a virtual presentation to reporters, the bank’s analysts said the outlook for leisure spending this summer looks promising, based on trends reflected in the bank’s card data, results from a survey of 2,010 respondents and other resources from across the bank. Spending this summer will likely be a little softer than last year’s, they said, but still strong.
“The strength of the data already speaks to it being a solid summer,” David Tinsley, senior economist at the Bank of America Institute, said during the presentation.
The bank’s consumer travel survey showed that 72% of people said they’re planning to travel, with 36% saying they’ve already planned their trip. It showed that more younger Americans are planning to take an international trip than older generations, while also planning for longer trips and to spend more.
From January through April, spending using a Bank of America card per household was the highest for Japan, South Korea, Switzerland, Colombia and Costa Rica. In April, the share of total in-person international spending through Bank of America was the highest for Europe (32%), followed by Canada and Mexico (23%), then the Caribbean (13%).
Domestically, California and Florida have seen some momentum recently when it comes to spending at restaurants. In the first four months of the year, spending rose more than 5% in California from the same period a year ago, while it was mostly flat in Florida. But compared to 2019, restaurant spending in California and Florida is up roughly 15% in each state.
Even among respondents making less than $75,000 a year, more than 60% said they’re planning to travel this summer. That figure is north of 80% for respondents making more than $150,000 a year. But the good times may not last forever. Americans have come increasingly under pressure with household debt continuing to climb and delinquencies rising, according to New York Fed data.
“In the first quarter of 2024, credit card and auto loan transition rates into serious delinquency continued to rise across all age groups,” Joelle Scally, regional economic principal within the Household and Public Policy Research Division at the New York Fed, said in a statement. Inflation is also still taking a bite out of people’s budgets and interest rates remain perched at a two-decade high.
Economists aren’t expecting a recession this year, but many are estimating the economy will slow over the next 12 months: The latest figures on employment came in weaker than expected. For some, this year’s summer splurge could well be the last hurrah.
