Americans avoid high fuel prices and prepare for record trips on July 4th | Business and economic news

A record 71 million people are expected to travel over the upcoming long weekend, a growth trajectory similar to pre-pandemic.

High fuel costs and the threat of a hurricane are not expected to dampen Americans’ desire to hit the road, with tourists gearing up for record-setting trips to kick off Fourth of July holiday festivities.

Auto group AAA expects a record of nearly 71 million people traveling during the U.S. Independence Day holiday, growth similar to a pre-pandemic trajectory.

About 60 million people will drive and nearly 6 million will fly to their destinations, while approximately 4.6 million people will take buses, trains or cruises during the holiday period, according to AAA’s forecast.

“We’ve never seen numbers like this,” said AAA spokesperson Andrew Gross, “2024 travel looks to be what 2020 would have been if not for the pandemic.”

Travel during the U.S. summer months will be closely watched on several fronts this year as it could offer central bank officials and policymakers an important measure of consumer sentiment in an election year.

Inflation remained unchanged in May even as consumer spending increased, raising hopes that the US Federal Reserve may be able to control inflation while avoiding a recession.

Gasoline prices have declined in recent months, with the national average price for a gallon of motor fuel at $3.50 ($0.92 a liter) on Tuesday, down three cents year over year past. Domestic airfare is 2% cheaper than last year, with the average round-trip domestic trip costing $800, according to AAA booking data.

‘I want to travel’

Despite recent declines, fuel prices remain well above historic levels. The average price for a gallon of gasoline was $2.74 ($0.72 per liter) during the week of the Fourth of July 2019, and the average weekly price from 2015 to 2019 was less than $2. 50 per gallon (0.66 per liter), according to the US Energy Information Administration. data.

Still, tourists’ travel plans are not affected by higher prices this year, according to a study survey of more than 1,000 people by the automotive retail group American Trucks.

Four-week average U.S. gasoline demand hit a one-year high of 9.2 million barrels per day (bpd) last week as retailers stocked up ahead of the holiday, EIA data showed on Wednesday. Four-week average jet fuel demand was 1.7 million bpd, identical to the seven-month high reached in early June.

“What we’ve noticed is that it’s more a matter of rate of change than the price itself that affects the psyche of consumers,” said John LaForge, head of real asset strategy at Wells Fargo Investment Institute.

Since the price of gasoline has not risen or fallen drastically in the last six months, the consumer psyche has not been affected by it, LaForge said.

For now, U.S. holiday travel is unlikely to be affected by Hurricane Beryl, which has devastated some Caribbean islands since Monday but is expected to weaken considerably when it hits Mexico’s Yucatan Peninsula on Thursday night.

U.S. fuel stocks are also better stocked than in recent years, providing drivers with protection against sudden price shocks if the hurricane affects refining operations.

“Americans are optimistic and want to travel, there’s no denying it,” said Patrick De Haan, an analyst at GasBuddy.