Expedia and Marriott rise as stimulus checks and easing restrictions boost optimism for travel and hospitality

family travel road trip
  • Expedia stock ended Thursday’s session at a record high and Marriott gained as travel optimism grew.
  • The US will begin sending $1,400 checks after President Biden signed off on a stimulus package.
  • New York State will lift some travel restrictions starting on April 1.
  • See more stories on Insider’s business page.

Shares of Marriot and other hotel chains pushed toward record highs Thursday as investors anticipated that new stimulus checks for millions of Americans and relaxed travel restrictions will lead to more bookings.

Hotel names rode up alongside other consumer discretionary stocks, in turn drawing the Consumer Discretionary Select Sector SPDR Fund up by 1.5% at the close.

Online travel bookings site Expedia rose by 2.1% at end at a record close of $171.08. Marriott tacked on 1.6% to end at $148.83, a third winning session. The stock two weeks ago logged its all-time high of $159.98.

The S&P 500 closed at an all-time high Thursday, the same day President Joe Biden signed off on a $1.9 trillion fiscal stimulus package passed by Congress. With his signature, the government will begin sending $1,400 checks to most Americans with the aim of assisting them until the economy fully recovers.

Some industry watchers have said consumers having more spending money can help the travel sector recover from the coronavirus crisis, but hurdles remain. The pandemic is still not over and millions of Americans are still out of work, they’ve cautioned.

But COVID-19 case counts “continue to decrease every day,” as more people are vaccinated, New York Governor Andrew Cuomo said Thursday as the state lifted its requirement for domestic travelers to quarantine after arrival, effective April 1. International travelers will still be required to quarantine.

Among other travel stocks, Hyatt rose 1.6% and InterContinental Hotels Group added on 0.6%. Hilton had been more than 1% higher intraday before turning lower, ending down by less than 1%.

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Americans have saved $1.6 trillion since the pandemic began. 3 shocking facts show how big that is.

americans spending
With $1.6 trillion in savings, Americans are set to spend.

Americans are ready for a shopping spree.

Coronavirus lockdowns and two stimulus packages left American consumers sitting on approximately $1.6 trillion of pent-up spending, according to Commerce Dept. figures released on Friday.

As the pandemic shut down the experience economy, Americans shifted away from social leisure – recreational time spent in groups – and toward activities enjoyed alone. Now, 11 months later, spending on this kind of solitary leisure hasn’t been enough to bring the economy back to its 2019 levels, let alone beyond. The many Americans who weren’t hit by job loss or pay cuts have built a fatter savings cushion than they would have otherwise.

Three striking data points put the American consumer’s $1.6 trillion in dry powder into perspective.

(1) Americans account for half of global savings during the pandemic

Worldwide, consumers saved an extra $2.9 trillion globally during the pandemic, per Bloomberg Economics estimates.

That means Americans’ $1.6 trillion in savings accounts for slightly more than half of the global number, followed by China, Japan, and major European nations like Spain and the UK.

Bloomberg expects these savings to continue to grow as restrictions continue and governments implement more stimulus, notably President Joe Biden’s $1.9 trillion relief package. But as the vaccine rollout picks up speed, more spending may happen sooner rather than later.

(2) American savings are equivalent to South Korea’s GDP

The amount of spending money Americans are currently sitting on is the equivalent of another major industrialized country’s economy. As of 2019, South Korea’s GDP, or annual output, was $1.6 trillion.

For context, America’s GDP is $21.5 trillion.

Experts are currently projecting 4.6% growth for US GDP this year, per Bloomberg. If Americans spend all the money they saved in the past year, that could jump to 9%; whereas if they don’t, the GDP forecast could drop to 2.2%.

(3) Americans saved more than the decline in spending

Experts continue to debate how big a hole the coronavirus left in the economy. Biden, Wall Street, and the Federal Reserve see a larger hole, while the Congressional Budget Office (CBO) and moderates see a smaller one, Insider’s Ben Winck reported.

According to the Congressional Budget Office, the potential total output of the US economy as of the fourth quarter of 2020 was about $22.15 trillion. But the Bureau of Economic Analysis’ estimate for GDP that quarter was just $21.49 trillion, suggesting an output gap of around $660 billion.

Americans’ $1.6 trillion in savings is therefore roughly $1 trillion bigger than the output gap. That means consumers won’t need to collectively spend the entirety of their pandemic savings to close the output gap.

While the full $1.6 trillion is unlikely to be spent, the changes seem good that the output gap will be more than filled when the economy eventually reopens. In fact, it could be more spending than the US economy has seen in some time, given the historically weak recovery from the Great Recession of 2008.

It’s why so many economists are predicting that lockdown lifting will see the biggest boomtime in a generation, potentially ushering in a new era in the US economy.

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