Summer travel kicking into high gear

Note: The Economic Data Tracker will be on hiatus next week (Week 22) and will return for Week 23.

Trend watch

Memorial Day weekend is the unofficial start of summer. It kicks off the busy three-month summer travel period—bringing a surge in traffic, tourism, and higher fuel consumption—book-ended by Labor Day in early September.

Early indicators suggest a solid start as the weekly U.S. air passenger counts jumped 7.2% in the past seven days to 18.6 million. That’s the highest weekly total since the first week of August 2025.

Last week we highlighted that container counts at the two largest U.S. ports, Los Angeles and Long Beach, had surged in April. Unfortunately, after adding in three more ports (Savannah, SEATAC, and Virgina), the container traffic rose just 1.0% in April but fell 5.4% for the first four months compared to the same period in 2025.

Our take

While we’re not focused solely on travel data, it provides a useful gauge of how consumers are adjusting to higher energy costs. The recent pickup reflects resilient consumer demand for travel heading into the peak season. That strength comes even as gasoline prices continue to move higher, creating a potential headwind for discretionary spending.

Energy markets remain in focus; however, nearly 70% of Saudi crude oil exports are now bypassing the Strait of Hormuz—an adjustment that underscores ongoing geopolitical considerations and evolving supply routes. While higher fuel costs could temper activity at the margin, current travel demand suggests consumers are largely absorbing the increase, at least for now.

Looking ahead, U.S. travel spending is expected to grow modestly in 2026 despite the pressure from higher gasoline prices. Similarly, retail sales have underscored this resilience by consumers. In fact, several of the largest U.S. retailers reported solid first quarter results this past week and echoed that consumers were, indeed, hanging in there. Thus, the travel industry’s forecast is probably a little conservative.

Yet, the broader economic backdrop remains mixed. Manufacturing activity has shown renewed momentum, with S&P Global’s index climbing to a four-year high in May, signaling improvement in goods-producing sectors. In contrast, services activity has softened, pointing to some unevenness in the consumer-driven parts of the economy.

Meanwhile, interest-rate-sensitive sectors continue to lag, as new single-family housing activity remains lackluster. This divergence highlights a bifurcated environment—firmer industrial activity alongside softer housing and services trends.

Within that context, travel demand appears relatively resilient, suggesting that while growth may moderate, it is unlikely to stall even amid higher energy costs and a mixed macro backdrop. Still, the fragile Middle East ceasefire and competing pressures around the Strait of Hormuz continue to pose an overhang for the global economy.

Bottom line

The U.S. economy continues to power through the uncertainty caused by the Iran War. Consumer activity remains resilient—buoyed by larger tax refunds that appear to be offsetting higher energy prices. Likewise, business activity is surging despite the cost pressures. While we expect higher energy prices to slow activity in the coming months, that impact has yet to materialize.