Introduction
The tourism industry in the United States is booming, as the number of domestic and international tourists grows at a stable rate. Even though domestic travel spending is accounted for 80% of the industry growth for the last five years, international travelers spent $7.7 billion in Miami alone between 2010 and 2018 (Lock, 1). The present paper aims at evaluating the growth of industry using the unemployment rate as the central indicator for evaluating the trends in travel decisions. The analysis reveals that the future of the industry is promising as is expected to develop despite possible threats.
Size and/or Growth of Industry
The size of the industry has been growing consistently during the past five years, and the trend is not expected to change. In 2018, domestic and international tourists contributed $1,089 billion to the US economy, which is roughly 5.3% of the national GDP (Lock, 1). In 2018, the annual growth rate of tourism expenditures in the US was 4.9%, which signified a minor slowdown in comparison with 2017, when the growth rate was over 5%. (Lock, 1).
However, the forecasts for the tourism industry are favorable, and, by 2028, it is expected to be over 2.4 trillion (Condor Ferries, 2). The mentioned growth is expected to be achieved due to the stability of the choices of domestic travelers. According to Lock, 38% of Americans want a vacation in Florida, and 66% of US citizens plan a domestic spring vacation.
Macroeconomic Indicators Their Importance and Impact
Unemployment is a macroeconomic indicator that should be monitored to predict the demand in the tourism sector and its potential growth. According to Alegre, Pou, and Sard, the intentions to go on holiday are expected to decrease in times of social and economic crises (3). The inflation rate can be considered a viable determinant of social and economic stability in a region (Alegre, Pou, and Sard, 3).
The tourism industry in the US is especially vulnerable to the indicator, as the majority of income in the sector comes from domestic travelers. Therefore, in the case of destabilization in the country, they’re expected to be a considerable decrease in the number of US citizens that will choose to travel on holidays. In particular, the unemployment rate must stay below the 10% mark, as it is considered critical by (Alegre, Pou, and Sard, 3). Even though unemployment is negatively correlated with the number of tourists from the region, it is vital to understand that the correlation is indirect.
Unemployment is usually affected by business investment and consumer spending. If consumer spending is robust, the citizens of the country may decide to spend more on clothes, homes, cars, and electronic devices (Hall, 4). An increase in production and sales leads to the creation of additional jobs, which improves the financial well-being of the population. At the same time, during steady economic growth, companies invest in their development, which also leads to the appearance of new job offers (Hall, 4). However, during times of economic recession, the employment rates decrease, and people tend to spend less on items that are not of immediate importance to them, including tourism (Hall, 4). Therefore, tourism participation is directly affected by consumer spending and business investment; however, it is more convenient to monitor unemployment as an indicator of the tendencies in these two matters.
Recent Trend in Unemployment
When forecasting the growth of the tourism industry, it is vital to understand the trends in current unemployment rates in the region. In particular, the unemployment rate must be below 10% to ensure the stability of the industry (Alegre, Pou, and Sard, 3). According to the US Bureau of Labor Statistics, the unemployment rate in the US is decreasing steadily (5). Figure 1 below utilizes the data from the current population survey taken in January for ten consecutive years.
The graph demonstrates that the unemployment rate decreased from 9.8% in 2010 to 3.6% in 2020 (US Bureau of Labor Statistics, 5). Since there is no indication that the unemployment rate will reach 10% in the nearest future, the tourism sector is expected to develop steadily. In particular, the growth rate of the industry is expected to be approximately 5% in 2020, as there are no evident reasons for an economic slowdown. Even though coronavirus has negatively affected tourism around the globe, the trend is not likely to affect the US, as it relies primarily on domestic customers (Lastoe, 6).
Conclusion
The present paper considered the unemployment rate as the primary indicator that can be used to forecast the trends in the development of the tourism industry in the US. The analysis revealed that unemployment has a considerable impact on traveling decisions in the US and abroad. The assessment of trends of employment rates in the US showed that there is no danger for the industry when considering only unemployment. However, it should be noted that other factors, such as global events, GDP, inflation can affect the industry.
Sources
- Susan Lock. 2019. Travel and tourism industry in the US – Statistics & Fact. Web.
- Condor Ferries. 2020. US Tourism & Travel Statistics 2020. Web.
- Joaquín Alegre, Llorenç Pou, and Maria Sard. 2018. High Unemployment and Tourism Participation. Web.
- Mary Hall. 2019. Unemployment and Recession—What’s the Relation? Web.
- US Bureau of Labor Statistics. 2020. Labor Force Statistics from the Current Population Survey. Web.
- Stacey Lastoe. 2020. Attractions Closed and Events Canceled amid Coronavirus Outbreak. Web.