The Latest Bearing Sign for the US Economy

The Federal Highway Administration reports that highway travel has declined from theben_franklin last quarter of 2016. That fits with weak consumer spending data from the first quarter of this year — but is a surprise to many economists.

Retail sales at gasoline stations are down 4.8% from this time a year ago. Those sales include gasoline, snacks and other items stations sell.

In reporting this, the Wall Street Journal speculates on a number of possible causes, including immigration enforcement.

The Journal doesn’t cite two obvious causes:

  • The decline in tourist visits to the US — down 16% from a year ago, and
  • Uncertainty about healthcare costs that may be causing consumers to cut spending.

The drop-off in tourism affects all industries that serve tourists:

  • Hotels and recreational facilities
  • Transportation, including air, rental cars and gasoline
  • Restaurants

The decline in this industry is a big deal and affects a lot of jobs as well as city and state tax  revenue.

It doesn’t look like consumer spending is going to drive economic growth.  If it doesn’t, is there anything else that can? Historically, the answer largely is no.

Further, Trump has alienated trading partners who might be interested in seeing our economy recover — Mexico, Canada, China, Germany. The downside of “America First” might be “America Alone”.


Sources:

  1. “Americans Tap Breaks on Driving,” The Wall Street Journal, 27-28 May 2017, p. B12.
  2. Kate Taylor, “Tourism in the US has drastically declined since Trump was elected,” Business Insider, 17 May 2017. http://www.businessinsider.com/trumps-rhetoric-hurt-us-tourism-and-retail-2017-5
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