Two summers ago, COVID-19 ended many Americans’ travel plans. Now, it’s inflation and prices at the pump.
According to a survey conducted by Morning Consult on behalf of the American Hotel & Lodging Association (AHLA), 57% of Americans are “likely to take a family vacation this summer.” However, 90% of Americans have considered “gas prices” or “inflation” when deciding whether to travel. In contrast, 78% listed “COVID-19 rates.”
“The pandemic has instilled in most people a greater appreciation for travel, and that’s reflected in the plans Americans are making to get out and about this summer,” AHLA CEO Chip Rogers said, according to CNBC. “But just as Covid’s negative impact on travel is starting to wane, a new set of challenges is emerging in the form of historic inflation and record high gas prices.”
Indeed, Monday marked the highest Memorial Day gas prices in more than a decade, according to data from AAA and the U.S. Energy Information Administration. Prices at the pump hit $4.62 per gallon on Memorial Day 2022 — 53% higher than the $3.03 per gallon on Memorial Day 2021 and 136% higher than the $1.96 per gallon on Memorial Day 2020.
Even before COVID-19 and lockdown policies suppressed driving demand at this time two years ago, gas prices were roughly $2.85 on Memorial Day 2019 — meaning that today’s prices are 62% higher than equivalent pre-pandemic levels.
Likewise, inflation is markedly higher than past rates as Americans head into the summer of 2022. Inflation, as measured by percentage change in the Consumer Price Index (CPI), was 4.2% in April 2021 — already higher than the 2% rate typically targeted by the Federal Reserve. In April 2022, inflation was 8.3% — a level that had not been seen in 40 years.
Other surveys likewise indicate that Americans are wary of high living expenses as they plan for the summer.
A poll from Echelon Insights found that 75% of parents are “extremely” or “very” worried about the “rising cost of everyday purchases like food or gas.” When asked if their households have “changed or canceled plans for a family trip” because of inflation, 51% answered positively — and 41% said they “changed or canceled activities for my children like camp or extracurricular activities.”
Indeed, the most recent Personal Consumption Expenditures Price Index (PCEPI) report from the Bureau of Economic Analysis showed that the metric rose 4.9% year-over-year in April. Because inflation is still outpacing gains in income, Americans appear to be reaching into savings to cover their expenses. In April, households only saved 4.4% of their after-tax income — the lowest level seen since 2008.
Another Bureau of Economic Analysis report released last week shows that the United States economy shrank at a 1.5% annual rate during the first quarter of 2022. The dismal results — which represented the most severe drop since Gross Domestic Product (GDP) plummeted by 31.2% in the second quarter of 2020 — were worse than the 1.3% Dow Jones estimate and a write-down from the originally reported 1.4%, according to CNBC.
The United States economy had been rebounding from COVID-19 and the lockdown-induced recession — expanding at a strong 5.7% in 2021 after contracting 3.4% in 2020. However, the economy has been plagued by various economic phenomena — including persistent inflation, high gas prices, low consumer confidence, and the Russian invasion of Ukraine.