AAA and IHS Global Insight released their latest annual Labor Day Travel Forecast on August 20, revealing an increase in expected holiday travel spurred by improvements in consumer spending and the U.S. housing market.
The Florida-headquartered leisure travel association projects that 34.1 million Americans will travel during the three-day holiday weekend, an increase of 4.2 percent from the 32.7 million observed in 2012’s report.
The median traveler is projected to spend $804 this Labor Day, up $55 from 2012’s total of $749. The projected spending increase is due to rising car rental rates, hotel rates and airfare. AAA indicated that average prices for these expenditures increased 32 percent, 4 percent and 4 percent, respectively, from the same period last year. Increases in discretionary spending were also a factor, the report said.
“While consumer confidence has grown stronger, weak growth in real disposable incomes is not sufficient to support a strong increase in consumer spending. Furthermore, households are continuing to face familiar troubles – high [though falling] debt burdens, payroll tax cut expiration, modest employment growth and low [though rising] house prices,” the report said.
However, Labor Day’s timing is expected to bolster spending. The reported noted that when the Labor Day falls earlier in September, people have shown a higher tendency to travel. Americans are particularly likely to travel when Labor Day falls on either September 1 or 2, as it does this year.
Advertisement: Scroll to Continue
We’d love to be your preferred source for news.
Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!
Top Categories For Consumer Spending
AAA found that average total spending per traveler rose to $804 from $749 in 2012, driven in part by increases in spending on food and accessories. Americans are expected to spend 24 cents of every dollar on transportation. Accommodations and food and beverages are anticipated to account for 24 percent and 21 percent of the average respondent’s budget.
The following chart illustrates which categories are drawing the highest levels of consumer spending across each of the nine studied regions in the report.
Top Regions For Labor Day Spending
Median total expenditures were driven by high totals in the Middle Atlantic and South Atlantic regions. The median total expenditure in these regions is expected to be $1,077 and $946, respectively. New England came closest to the national median total expenditure with a median of $804.
Spending is expected to be the lowest in the Pacific West, North Central and Mountain regions, with travelers in each area spending less than $700. AAA cited the slow economic recovery in the Pacific region as the primary factor for its depressed spending. However, it noted that the total number of trips taken by consumers from this region is rising at the second-fastest level among the nine studied regions.
What Labor Spending Says About Q3 Spending
AAA said that the economic outlook heading into Labor Day remained mixed, but that it “appears to be on a gradually increasing trend.” The reported noted that the financial and housing markets have increased household worth by 8 percent from 2012.
“As a result, consumer spending should increase 3.4 percent in the third quarter, relative to last year’s levels,” the report said.
For more insights and statistics, read AAA and IHS Global Insight’s full report here.
Add as Preferred Source
