Travel overseas while the dollar is high

If you need an excuse to travel overseas, here it is: the strong U.S. dollar.

Today, for example, you would have received 0.88 Euros for one U.S. dollar. (See Google image below.) That tied the exchange rate in Nov. 13 and Aug. 15. Before those dates, the last time the dollar was that high against the Euro was 0.94 on April 7, 2017.

A strong U.S. dollar means someone can exchange it for more of a foreign currency. (It also means U.S. consumers can buy foreign goods sold here for less, but foreign consumers will pay more for U.S. goods imported to other countries.)

Why is the dollar up? Well, there are several reasons:

1. The U.S. economy is sustaining strong growth when many other countries’ (China and Germany, for example) economic growth is slowing. The U.S. gross domestic product, which is a measure of economic growth, was 3.5 percent in the third quarter and 4.2 percent in the second quarter.

2. The currencies of some countries have been hurt by fears that U.S. tariffs will curb economic growth.

3. Some countries’ currencies have fallen for other reasons, such as economic crisis (Venezuela) and high inflation (Turkey) and high foreign-currency debt levels (Indonesia).

This summer, some Wall Street forecasters expected the dollar to fall from its lofty perch. Morgan Stanley, State Street Corp. and Wells Fargo & Co. said the dollar’s fast rise (up about 5 percent from mid-April to late July) was nearly over, according to Bloomberg article.

The dollar’s fall hasn’t happened yet. It’s anyone’s guess when it will, but it will. Currencies rise and fall like the stock market.

So, take advantage of the strong dollar combined with the proliferation of low-fare European airlines and plan trip soon.

U.S. travel grew in July, but a slowdown may be coming

U.S. travel increased this summer, but growth is slowing even as a global travel boom continues.

That’s according to the latest data from the U.S. Travel Association (USTA).

Travel to and within the United States grew 3 percent in July from a year earlier, according to the USTA’s Travel Trends Index. And travel for the first seven months of this year has grown faster than the same period in 2017, said David Huether, vice president for research for the USTA.

Growth is credited mainly to increased domestic travel on the heels of higher consumer confidence. Business travel, in particular, is having its best year since 2010, Huether said.

However, domestic and international travel growth decelerated from June to July, a trend the USTA expects to continue over the next six months, though growth will remain positive. The association predicts domestic travel will grow an average of 2.4 percent through January.

Adam Sacks, president of the tourism economics group at research firm Oxford Economics, said “cooling consumer indicators and the potential for slower business investment growth” through the rest of this year could hurt domestic travel. Oxford prepares the Travel Trends Index for the USTA.

For example, new orders for durable goods, which can reflect future consumer and business demand, declined 1.7 percent in July, according to the U.S. Census Bureau. In addition, steep U.S. tariffs on many foreign products have risen fears about the long-term effect of the escalating trade wars on U.S. consumers and businesses.

Census July 2018 durable goods chart

As global economic growth moderates, the USTA predicts international travel will grow at an average rate of 1.6 percent through January. A longer-term concern, said USTA CEO Roger Dow, is that inbound international travel is not accelerating fast enough to boost the U.S. share of the global travel market, which peaked at 13.6 percent in 2015.

Case in point: In 2017, nearly 77 million people from other countries visited the United States, which was basically flat (+0.7 percent) from 2016, according to recent data from the International Trade Administration’s National Travel and Tourism Office. More visitors came from South Korea (+18 percent), Brazil (+11 percent), Argentina (+10 percent) and Ireland (+9 percent).

Is U.S. travel increasing despite or because of election?

The U.S. presidential election didn’t put a damper on U.S. travel in November as some expected.

In fact, business and leisure travel within and to the United States that month increased at a faster-than-average pace over the last six months, according to the Travel Trends Index released this week by the U.S. Travel Association and Oxford Economics. And travel is expected to continue to grow in the next six months even with some continued uncertainty.

After Donald Trump’s election win in November, “we were prepared to see a wary short-term reaction, particularly in demand for inbound international travel to the U.S.,” U.S. Travel Association CEO Roger Dow  said in a statement.”Not only has no downturn materialized, but we have seen surprising strengthening in some areas, particularly the long-foundering domestic business travel segment.”

The travel uptick mirrors the rallying stock market, steady employment growth and other positive economic indicators. It should be noted that many of those indicators already were on an upward trend for many months before the election.

stock-graph
Stocks have rallied across indices: the Dow Jones Industrial Average (green line), the Standard & Poor’s 500 (blue line) and the Nasdaq (red line). Graphic is for the last six months. (Yahoo Finance)

The Dow Jones Industrial Average, one of the nation’s best stock baromoters, has gained 1,633 points since election day. Moreover, the Dow closed above 19,000 on Nov. 22 — for the first time in its 120-year history– and has been trading above that mark ever since then as investors expect more business-friendly regulations under Trump.

Today, the Dow was down 63 points as of 2:35 EST from Wednesday.

November travel trends

Travel within the United States accelerated in November, continuing a six-year expansion, according to the Travel Trends Index.

Most of the gains came from domestic leisure travel, which grew faster than domestic business travel. Still, domestic business travel reversed a trend where it was the only index segment to spend most of 2016 in negative territory.

International travel to the United States also rose in November, but at a slower pace due to pressures, such as global political and security disruptions and the strong U.S. dollar.

Outlook

Uncertainty still exists until Americans see more details about President-elect Trump’s policies.

The U.S. Travel Association predicts that overall U.S. travel will increase at an annual rate of about 1.8 percent through May, thanks to solid employment growth and healthy consumer spending. Once again, that growth will be led by domestic leisure travel based on forward-looking travel bookings, searches and vacation plans.

Adam Sacks, president of Oxford’s tourism economics group, expects international travel growth early this year will remain sluggish—and possibly decline—due to ongoing global political turmoil and the strong U.S. dollar.

Welcome to my blog

I’m soft launching this blog (and website) with my first post about airlines, a topic I’ve written about on and off the better part of a decade.

You’ll probably see mostly travel posts over the next few weeks from a soon-to-be-evident location, but I expect this blog to evolve over time.

Think of this as a place you can come to find a variety of interesting stories, photos, charts and graphics here about aviation, travel, health and fitness, economics and more. I like data and I like people, so you’ll see both here. I also may link to some of my writing that’s published elsewhere.

You can read about me here. Follow me on Twitter at @SJeanWrites.