All Americans Get A Slice Of The Financial Pie With Trump’s Tax Cut Success Story
The $2.3 trillion U.S. travel industry has had a long and steady climb back to full health since it was literally grounded on the morning of 9/11/01. Travel now supports one out of every nine U.S. jobs, and international inbound travel to the U.S. is the country’s No. 2 export (yes, inbound foreign travel counts as an export, as visitors bring their hard currency here and spend it on American goods and services). Travel overall has expanded for 96 consecutive months.
But despite the industry’s success in contributing to American prosperity, one segment has been frustratingly reluctant to catch fire — domestic business travel. Though the stock market has been on a rampage pretty much since the Great Recession, a range of factors—including a burdensome regulatory environment and an uncompetitive tax code — slowed business investment and reduced business confidence, which in turn dampened business travel. From 2008 to 2016, while domestic leisure travel expanded by 16 percent, business travel was stuck in the mud, actually declining by one percent.
That’s changing. Last year, business travel increased by a solid 1.7 percent, nearly as fast as the two percent rise in leisure travel. My association’s monthly tracking of travel in the U.S. expects business travel to further accelerate during the first half of this year.
The primary reason? The business community has reacted positively to President Trump’s signature legislative achievement: cutting taxes.
The tax cut, combined with still-low interest rates, bodes well for business activity in 2018. In the upcoming year, industrial production is forecast to grow by 3.6 percent, and business fixed investment is forecast to grow by 6.5 percent.
The natural outgrowth of that is that businesses have renewed confidence to spend money on “elective” services—and business travel will be one of the major beneficiaries. The U.S. Travel Association’s latest forecast projects that business travel is poised to grow at the fastest pace in two decades. It will even outpace leisure travel for each of the next two years, something that has not happened any time this century.
Adam Sacks, president of Oxford’s Tourism Economic Group, noted a foundation for continued domestic travel growth going forward, thanks to “solid economic fundamentals at home, including a 0.4 percentage boost to GDP growth from tax cuts.”
In 2017, business travel-related spending injected $317 billion into the U.S. economy. Those dollars drove $53 billion in tax revenue to vital public services like fire and police departments and public schools, and directly supported 2.6 million jobs. Those numbers will rise thanks to the tax plan-induced growth projected for domestic business travel.
As the generator of 15.3 million American jobs that are not outsourceable, travel is absolutely vital to the president’s priorities of a robust domestic employment market and sustained three percent GDP growth. The turnaround in a long-flagging segment of the travel economy is as remarkable as it is beneficial to his agenda and to the country.
David Huether is the Senior Vice President for Research at the U.S. Travel Association.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.