The Driving Season
Memorial Day is considered by many to be the unofficial beginning of the summer driving season. That wasn’t what it started out as when in 1868, May 30 was first proclaimed Decoration Day. Its observance was marked by the placement of flowers on the graves of Union and Confederate soldiers at Arlington National Cemetery.
After World War I, it became a time for honoring the memory of all who had fallen in American wars, not just those who lost their lives in the Civil War. In 1971, Congress passed the National Holiday Act which moved the day to the last Monday in May, rather than the date of May 30.
Though the number of formal observances to remember those who gave their lives for America’s freedom has diminished, public interest and appreciation of our military remains high. The highlight of the Memorial Day weekend for many people, however, has become time spent at picnics, family gatherings, and myriad recreational and sporting activities.
Probably the most well known competition that occurs this weekend is the 500-mile race that takes place at the Indianapolis Motor Speedway. Fans of racing will be present or tuned in via television to watch the 90th running of the Indy 500. (The first race was held in 1911, but there were none in 1917-1918 or 1942-1945 because of war.)
While the Speedway’s two-and-a-half mile oval will be the focus of attention for thousands, many more will be spending time on the open road taking advantage of the long weekend or making preparations for later summer vacations.
Although high gasoline prices will present a formidable challenge to some motorists, thereby dampening the tourism season, the Travel Industry Association of America predicts that leisure trips (at least 50 miles) will still climb from around 322.9 million last year to 325.6 million this year.
Still, the MapQuest Summer Survey indicates that high gasoline prices will cause seven out of every ten families planning road trips this summer to give some consideration to limiting their duration. About 10% say they are planning on canceling their plans altogether. Even so, nearly half of Americans (49%) are determined not to be denied their summer excursions regardless the cost of fuel. Another 25% are examining various options.
AAA estimates travel this weekend will likely be up some 0.9% over last Memorial Day. That translates to around 37.6 million Americans—84% of them on the road.
Normally, approximately 12% of Americans travel over the Memorial Day weekend, which is nearly the same as the percentage of Labor Day travelers. Independence Day weekend usually induces some 17% of Americans to take trips. The number one summer month for travel is August (29%) followed by July (27%) and June (24%).
Of the changes in vacation patterns to be noted this year, the most significant relates to their length. The average summer trip this year will be around six days, compared to eight in 2002. In addition, less-expensive accommodations and lower-priced restaurants are on the menu for many families. Reservations for campgrounds are already up some 20% for June, July, and August.
To combat motorists’ indecision and encourage more travel, numerous major tourist destinations (as well as resorts, restaurants, and hotels) are offering incentives that vary from price reductions to free gasoline.
In many cases, vacations by motor vehicle will be replaced with travel on airplanes or cruise ships, as both industries are expecting growth this summer. International flights have already climbed significantly above last year. The weaker dollar is even encouraging greater numbers of foreigners to visit the US over the next few months.
Of the preferred destinations this weekend, cities will be the top choice for about 23% of the travelers, followed closely by small towns and rural areas at 22%. Other popular destinations include the ocean/beach, 16%; lakes, 13%; mountain areas, 8%; theme/amusement parks, 6%; and state/national parks, 1%.
Americans love their traditions, and traveling on Memorial Day weekend is one that is hard to give up regardless of cost increases. Vacations can be good for you and, of course, tourism is certainly beneficial to the Texas and US economies.
So, as they will be saying at the Indy 500 this weekend, ladies and gentlemen, “Start your engines!”
posted @ 08:12 AM CST [link]
Friday, May 12, 2006
Economies on the Rise
The unusual normally gets the attention of the news media, and when the unusual pertains to the economy, even more ink and broadcast time is often devoted to the situation.
So much doom and gloom has been written about oil prices, deficits, and interest rates, it is particularly pleasing to observe at least some attention now being given to positive economic developments in the US, as well as around the world.
Recent reports note that for the first quarter this year, the nation’s gross domestic product expanded at an annual rate of some 4.8%, the fastest growth of any major industrialized nation. This hike is more than double the 1.7% recorded for the last quarter of 2005 and is the highest growth rate in two and a half years.
To put it in a different perspective, except for the third quarter of 2003, the growth rate of the economy from January through March this year is the greatest quarterly jump during the presidency of George W. Bush, and that, as you recall, began in January 2001. Moreover, the first quarter 2006 economy upward tick might have been even more had it not been for the trade deficit which whittled about 0.8 percentage points from the total gain.
The nation’s rebound from the devastating hurricanes last fall has been quite noticeable in most areas of the economy, and much of the success is attributable to the ongoing advancement in productivity, or output per hour worked. For the first three months of this year, productivity has risen at an annual rate of 3.2%. Hourly compensation rose at 5.7%, more than double as in the previous quarter.
Additionally, consumer spending and business investment have had a significant share of the responsibility for most of the forward surge. In fact, personal consumption expenditures, which increased about 5.5%, were responsible for nearly 3.8 percentage points of the 4.8% economic output expansion.
Job growth has also played a highly substantial role in the advancement of the nation’s economy. From January to March, job gains have averaged about 200,000 per month nationwide; over the past year, the economy has created approximately 2 million jobs. The unemployment rate of 4.7% is currently lower than the average of the 1960s, 1970s, 1980s, and 1990s.
Not only has America been experiencing economic success, but the world economy has also been expanding, and expectations call for continual growth this year as well as next. Possible blemishes on future growth relate to volatile oil prices, the strength of the US dollar, and the imbalance of exchange rates. Nonetheless, these factors are not expected to stifle growth to any substantial degree. The past year saw the highest rate of global growth ever recorded, and 2006 is tracking clearly on its heels.
Over 70% of global economic expansion is now occurring in developing nations. Almost a third of it is in China, which is setting the pace of growth along with India and the rest of emerging Asia. There has also been rapid economic development in Latin America, the Middle East, and Africa. Moreover, Japan’s economy is recovering, and many parts of Western Europe are achieving an economic upturn.
Still, the US remains the driving economic engine for the world, and the momentum for the future is positive with little hint of increased inflation. However, we’re not on the yellow brick road yet. Numerous challenges continue to face us. The high energy prices are still of great concern and are beginning to affect various areas of the economy. If prices remain elevated over a lengthy period, they could have a negative impact on the nation’s economy.
Another concern relates to the need for the federal budget to be shaped appropriately so that it will be sustainable over the long term. In addition, there are health care issues, the war in Iraq, and political tensions in many parts of the world plus the cooling of the red-hot housing market to worry about.
The combination of the factors above will likely cause the US economy to slow down a bit the rest of the year and may encourage the Federal Reserve to leave well enough alone at its meeting in late June or shortly thereafter.
Miguel de Cervantes, the Spanish novelist who created Don Quixote in the late 16th and early 17th century, had a good idea. He said, and I’m paraphrasing, that each situation looks different depending on the color of the glasses through which one gazes. As I look toward the future, the color of optimism is my first choice.
posted @ 07:56 AM CST [link]
Economies on the Rise
The unusual normally gets the attention of the news media, and when the unusual pertains to the economy, even more ink and broadcast time is often devoted to the situation.
So much doom and gloom has been written about oil prices, deficits, and interest rates, it is particularly pleasing to observe at least some attention now being given to positive economic developments in the US, as well as around the world.
Recent reports note that for the first quarter this year, the nation’s gross domestic product expanded at an annual rate of some 4.8%, the fastest growth of any major industrialized nation. This hike is more than double the 1.7% recorded for the last quarter of 2005 and is the highest growth rate in two and a half years.
To put it in a different perspective, except for the third quarter of 2003, the growth rate of the economy from January through March this year is the greatest quarterly jump during the presidency of George W. Bush, and that, as you recall, began in January 2001. Moreover, the first quarter 2006 economy upward tick might have been even more had it not been for the trade deficit which whittled about 0.8 percentage points from the total gain.
The nation’s rebound from the devastating hurricanes last fall has been quite noticeable in most areas of the economy, and much of the success is attributable to the ongoing advancement in productivity, or output per hour worked. For the first three months of this year, productivity has risen at an annual rate of 3.2%. Hourly compensation rose at 5.7%, more than double as in the previous quarter.
Additionally, consumer spending and business investment have had a significant share of the responsibility for most of the forward surge. In fact, personal consumption expenditures, which increased about 5.5%, were responsible for nearly 3.8 percentage points of the 4.8% economic output expansion.
Job growth has also played a highly substantial role in the advancement of the nation’s economy. From January to March, job gains have averaged about 200,000 per month nationwide; over the past year, the economy has created approximately 2 million jobs. The unemployment rate of 4.7% is currently lower than the average of the 1960s, 1970s, 1980s, and 1990s.
Not only has America been experiencing economic success, but the world economy has also been expanding, and expectations call for continual growth this year as well as next. Possible blemishes on future growth relate to volatile oil prices, the strength of the US dollar, and the imbalance of exchange rates. Nonetheless, these factors are not expected to stifle growth to any substantial degree. The past year saw the highest rate of global growth ever recorded, and 2006 is tracking clearly on its heels.
Over 70% of global economic expansion is now occurring in developing nations. Almost a third of it is in China, which is setting the pace of growth along with India and the rest of emerging Asia. There has also been rapid economic development in Latin America, the Middle East, and Africa. Moreover, Japan’s economy is recovering, and many parts of Western Europe are achieving an economic upturn.
Still, the US remains the driving economic engine for the world, and the momentum for the future is positive with little hint of increased inflation. However, we’re not on the yellow brick road yet. Numerous challenges continue to face us. The high energy prices are still of great concern and are beginning to affect various areas of the economy. If prices remain elevated over a lengthy period, they could have a negative impact on the nation’s economy.
Another concern relates to the need for the federal budget to be shaped appropriately so that it will be sustainable over the long term. In addition, there are health care issues, the war in Iraq, and political tensions in many parts of the world plus the cooling of the red-hot housing market to worry about.
The combination of the factors above will likely cause the US economy to slow down a bit the rest of the year and may encourage the Federal Reserve to leave well enough alone at its meeting in late June or shortly thereafter.
Miguel de Cervantes, the Spanish novelist who created Don Quixote in the late 16th and early 17th century, had a good idea. He said, and I’m paraphrasing, that each situation looks different depending on the color of the glasses through which one gazes. As I look toward the future, the color of optimism is my first choice.
posted @ 07:56 AM CST [link]
Friday, May 5, 2006
Boycotts
Boycotts have been a part of American life since the Boston Tea Party. Well, that’s a stretch, I admit, but only on a technicality. Let me explain.
American historians have classified the actions of Colonial Americans who defied the British by dumping tea into the Boston Harbor in 1767 as a boycott. But, as you know, history is usually written by people living later than the events they describe, and in 1767 the word “boycott” was not even in the English vocabulary.
Earlier that year, the British had adopted the Townshend Act that taxed tea and other products imported by its colonies. When the colonists responded by enacting a Non-Importation agreement, sales to the new world dropped sufficiently enough as to cause the repeal of the harsh British law, though the tax on tea was retained.
The result? The dumping of the tea and the refusal to purchase it in the future, i.e., the boycott.
The term “boycott” was originally the last name of Captain Charles Cunningham Boycott, the estate agent of the Earl of Erne in Ireland. In the 1880s, land reform advocate and politician Charles Parnell solicited property owners to reduce rents on tenants under certain circumstances. Rather than doing so, Boycott evicted those living on the Earl’s land. Parnell’s supporters retaliated by giving Boycott the cold shoulder and, with help from the Irish Land League, managed to isolate the former Army captain, leaving him without servants, farmhands, mail delivery, or service in the local stores.
Soon Boycott’s name became permanently associated with this kind of treatment and its use quickly spread in other languages including Dutch, German, French, and Russian.
The bus boycotts, economic boycotts, massive demonstrations, and marches in the 1950s and 1960s are probably matters with which we are quite familiar as they led to the Civil Rights Act of 1964 and the Voting Rights Act of 1965. However, there have been quite a number of other boycotts around the world over the past century.
In 1905-1906, Russian peasants, workers, students, and the intelligentsia used this process to force the Czar to allow an elected legislature. A series of strikes or work boycotts in 1919-1920 resulted in Egypt gaining its freedom from British rule.
An organized campaign of non-cooperation led by Mahatma Gandhi over a period of more than 20 years was a contributory force leading to India’s independence from Great Britain in 1947.
Another lengthy endeavor, the anti-apartheid movement in South Africa, was kicked off by a local boycott that spread to supporters throughout the world. The 35-year effort eventually resulted in the dismantling of the apartheid in the early 1990s.
Other well known boycotts include the 15-year campaign against the purchase of California grapes (which led to the establishment of union contracts between farm workers and growers in 1984) and the 17-year crusade against Nestle (which caused a billion dollar loss in profits and a change in company practices in 1984).
In this century, we have already seen boycotts and massive demonstrations in Burma, Nigeria, China, and other countries. The outcomes the people are seeking include human rights improvement and economic stability.
Even though the event in which immigrants and their supporters participated this week was officially a general “protesta,” or a protest against immigration practices, it was also an economic boycott as there were calls for those involved to refuse to participate in school and work activities and to refrain from most purchases.
The thousands who demonstrated in various cities across the country were attempting to focus greater attention on the immigration situation and perhaps make some impact on the US economy. The success of their efforts is yet to be determined. As a practical and purely economic matter, one-day boycotts rarely have much of an impact. Though they are a source of inconvenience and dislocation, most purchases are merely deferred a day or two, and most of the work that was to be done ultimately gets done. The common denominator of the historic efforts described above is that they persisted over an extended period. From a broader perspective, however, the implications could be more profound.
Analysts, politicians, economists, talk show hosts, and the American public are still evaluating the boycott our nation experienced on May 1. Though there is no consensus as of yet, most would undoubtedly agree that awareness of the immigration situation has been heightened by this effort and other recent events. The world is now watching to see what our elected representatives will do to find the solution that will be in the best interest of our nation and all the people involved. In a future column, I will give you my thoughts on the economic aspects of what that solution should look like.
posted @ 07:41 AM CST [link]