Hi everyone, this is Dr. Nitin Chhoda and welcome to this episode of Ignition Time.
As you know, individuals in travel leisure, entertainment and hospitality
have been decimated as a result of this pandemic.
But as the $1400 stimulus checks start to make their way
to millions of our fellow Americans, there's been a lot of speculation about
what exact impact this will have? Are people likely to invest in the stock market?
Are people likely to invest this money on eating? Are people likely to invest
this money in shopping and retail therapy in what some call revenge spending?
I'm going to spend money.
That's not how I normally am.
But in some brand new reporting,
it seems that individuals are going to be spending this money on travel.
Yes, people are just sick and tired of being home and people want to start
traveling and people want to get out there.
Here's some brand new reporting from Bloomberg on your screen.
Americans signal they'll spend stimulus on travel, not GameStop.
This means that individuals are likely to use the stimulus check to get
on a plane, to get on a train, to take a break and essentially get out
of their house and finally, finally travel and see the world or
different parts of the country, or meet friends and family or meet
relatives in distant, in distant states or distant countries.
People just want to get out and people
want a break from staying at home all the time.
Now, what's interesting is with the $600 stimulus checks,
a lot of people just pumped that money back into the stock market.
But now that the economy is starting
to reopen, now that individuals are essentially starting to go back to their
daily lives slowly across the country, the impact of the $1400
stimulus check is going to result in more travel.
Here's a quote on your screen from this Bloomberg article.
But with the economy gradually opening,
the calculus is less simple this time around as $410 billion
starts to land in bank accounts around the country. Back then,
meaning with the second stimulus check of $600, pajama-clad
gamblers and bored workers who didn't need the cash turned into market newbies driving
a surge in brokerage accounts and fueling the stock rally.
In fact, the article continues.
New data suggests vaccinated Americans are emerging from lockdown's ready to splurge
on plane tickets instead of airline stocks.
Disneyland beckons along with beach vacations and visits to relatives.
Disneyland sounds interesting.
Wall Street analysts are noticing predictions that day traders would pour
cash into the market have turned into forecasts for a surge in retail spending.
In fact, here's proof of a pent up demand in travel.
Let's show you this chart on your screen. Staying grounded.
Travel agencies lost $70 billion in airline bookings in 2020.
Let's take a look at the trends through the years leading up to 2020.
In the six years prior to the pandemic,
the total amount of transactions was approximately $90 billion a year.
In 2020, that total fell to $23 billion
and so far in 2021, it just ends at $2.8 billion.
That is a huge pent up demand for people who want to now get on flights.
In fact, let's take a look at the Dallas Fed Mobility Index.
This basically indicates how likely are
people to pack their bags and go on a trip somewhere.
Take a look at this chart on your screen
and take a look at where we were on the index prior to the pandemic and how
sharply we felt in March, April, May of twenty twenty.
And now look at the index.
It started to come back down and then it started a little and now it's starting
to surge back to where things were prior to the pandemic.
People are starting to pack their bags and people are starting to travel again.
And travel is going to be the number one
indicator of a powerful and a strong economic recovery.
Now, here's something that's interesting.
A Bank of America global research survey
found that 53 percent of those making less than thirty thousand dollars a year
planned to save, invest or use the extra money to pay down debt.
Historically, that number tends to be very, very, very small.
But now more and more individuals want to pay down debt.
And and here's what's interesting
for those among the top fifth of income earners.
They want to do something with their money.
So it does look like there's going to be a correlation between income and travel.
But the bottom line is more and more people now want to travel more and more.
Here's another article on your screen, this time from The Wall Street Journal.
Las Vegas, after its latest bust, aims for another boom.
I think it's safe to say that Las Vegas is
the gambling and entertainment capital of the country and for many people,
the gambling and entertainment capital of the world.
In fact, Vegas took a big, big, big hit as a direct result of the pandemic.
Let's show you this chart on your screen.
The unemployment rates of the US and Ingrey vs.
Las Vegas in blue, you start to see that the unemployment
rate in Las Vegas was always higher than the US unemployment rate.
And in fact, in fact, this is the alarming part.
When the pandemic hit in the gray zone that you see on the right side of this
chart, you'll see that the blue section went way higher than the gray section
of the woods, the unemployment ratio in last.
This was much higher compared to the rest
of the country and Las Vegas is now expecting to bounce back stronger because
people just probably want to go to Vegas and gamble.
In fact, while we're on the subject, let's take a look at another chart on your
screen of the total nonfarm workers, leisure and hospitality versus others.
Leisure and hospitality workers made up
more than 25 percent of the workforce in Las Vegas before the pandemic.
And job losses have been severe
in the past 12 months as a direct result of the pandemic.
As we move from left to right.
You will see that twenty five percent
of the workforce was all related to leisure and hospitality,
empty hotel rooms, implying that there's no job essentially for not only
the cleaning staff, but also the front desk staff, the valets,
people in the restaurants who work at those who work at those fancy hotels.
Essentially, it creates a chain reaction
which results in a loss of hundreds of thousands of jobs.
And now those jobs are starting to come back because people are packing their bags
and heading to Las Vegas and different parts of the country.
And this is the leading indicator of the economic recovery.
And here here's another sign of an accelerating economic recovery.
Here's an article on your screen from Bloomberg.
Bars and restaurants are about to go on an epic post pandemic hiring spree.
Signs of life are emerging as restaurants
and bars and salons are indeed starting to open up.
And Goldman economists from Goldman Sachs
are predicting a four point one percent unemployment rate by the end of the year,
which will be excellent because prior to the pandemic, we were at three percent.
Look, this really took the wind out of the economy for almost a year.
It's expected that we rebound sharply not only as far as travel is concerned,
because I alluded to Las Vegas and other and other travel earlier,
but leisure and hospitality, specifically restaurants and bars,
salons are all expected to reopen, leading to a strong bounce back in the economy.
So if I had to rank the leading economic indicators, I would say that travel is
first and leisure and hospitality is number two.
In fact, here's something interesting.
Weather has a lot to do with the economic recovery.
The weather in February was quite unusual in different parts of the country.
We all remember what happened in Texas.
And so here's some reporting from economists at Bloomberg.
Were it not for inclement weather,
the February payroll print would have been closer to four hundred thousand or more.
In other words, many more people would
have been would have been employed as opposed to still remaining
on unemployment, the reopening of the economy,
plus payback for bad weather, in other words, as the weather gets a lot better.
And boy, oh, boy, I can tell you I'm looking forward to better weather.
The reopening of the economy plus payback for bad weather will lead to a much
stronger outcome in March, according to economists from Bloomberg.
Let's take a look at this chart from Bloomberg.
Leisurely comeback.
That's pretty interesting.
A comeback for leisure.
That's kind of leisurely, although if you're in the Travel Leisure,
entertainment and hospitality industry, I don't blame you if you're not smiling.
Restaurants and hotel jobs are still down
20 percent after completely cratering last spring.
Let's look at the trends as we go
from back prior to the pandemic and that big, big,
massive dip that occurred during the pandemic, we started to recover.
Then we tapered off a little bit.
And now the recovery is gradually picking up steam.
And as the weather gets better, as the economy reopens,
as more people get vaccinated, we are expected to see that decline come
back to where we were prior to the pandemic.
My prediction is the end of this year,
no later than the first quarter of next year.
I hope I'm wrong and I hope we can get there even before the end of the year.
And that does seem to be a distinct
possibility because these are good signs that are emerging every single day.
So that's it.
That's why I think everybody it's not like it's raining money just yet.
You see that? That's one of my favorite effects.
As you know, it's not like it's raining money, but these are all encouraging signs
because travel is the leading indicator of economic recovery and people are
starting to pack their bags and travel again.
I mean, put yourself in the shoes of someone who's been cooped up at home
for a long time, just as you have been, I'm sure.
And if you could,
would you not want to get out of the house and essentially travel somewhere?
This doesn't necessarily mean you'd get on a plane.
You could get in your car,
you could get on a train, you could just go somewhere just so
that you have a break from being stuck indoors for a long, long, long time.
Something you are not accustomed to doing, something you are forced to do
and something that you hopefully no longer have to do.
Thank you so much for watching, everybody. My name is Dr.
Nitin Chhoda with Ignition Time.
I want you to know that I greatly, greatly appreciate you.
I'm looking forward to seeing you in the next episode of Ignition Time.
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That would mean a lot to me personally.
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Thank you. Take care.
Bye.