Americans Still Plan To Travel This Summer, “No Matter What”

As of last month, the U.S. jobs market fully recouped the number of jobs that were lost due to the pandemic, in less than half the time it took following the previous downturn. A stunning 528,000 jobs were added in July, pushing the total number of payrolls above the February 2020 level.

Jobs Market Has Fully Recovered in Less Than Half the Time as Last Cycle

Good news may be bad news in this case, however, as the blockbuster jobs report may prompt the Federal Reserve to tighten more aggressively than planned to cool growth. This could decisively trigger the recession many market-watchers believe we’ve already entered, with real gross domestic product (GDP) having shrunk for two consecutive quarters, inflation standing at near-historic highs and a service sector in contraction.

In addition, U.S. yields have inverted at the deepest level since 2000. On Thursday, the yield on the two-year government note closed at 3.03%, the 10-year at 2.68%, a difference of 35 basis points. Every recession in the past several decades has been preceded by a yield curve inversion, so we may be in the very late stages of the business cycle.

It will be interesting to see what Jay Powell & Co. decide to do at the next Federal Open Market Committee (FOMC) meeting, scheduled for September 20-21.

Americans Are Cutting Back On Driving, But Lower Fuel Costs Could Be A Game-Changer

Another sign that parts of the economy may be slowing? Lower fuel demand coupled with falling gas prices. Energy Information Administration (EIA) data shows that this summer, Americans are consuming less gasoline per day than they did in the summer of 2020, when nearly everyone was stuck in their homes bingeing Tiger King on Netflix.

Gas prices above $5 per gallon, it seems, are a greater deterrent to venturing outside your house than Covid fears and government-mandated lockdowns were.

U.S. Demand For Gasoline Fell Below 2020 Levels

The decrease in driving activity is in line with the results of a recent survey conducted by the American Automobile Association (AAA). The nonprofit found that a whopping 88% of Americans were driving less due to higher gas prices. Three quarters of respondents said they were combining errands, while 56% said they were reducing shopping and dining out.

Interestingly, only 13% of people who took the survey said they were driving a more fuel-efficient vehicle in response to soaring gas prices; virtually no one, or 2% of respondents, said they were switching to an electric vehicle (EV).