Key insights
- AAA projects record Memorial Day auto travel despite high gas prices, signaling resilient consumer spending on leisure despite inflationary pressures. This suggests continued economic activity, potentially supporting equity markets in the short term, although sustained high energy costs could eventually dampen consumer sentiment.
Investing.com -- A record 39.1 million Americans are expected to travel by car over Memorial Day weekend, the American Automobile Association said Monday, marking the highest number of holiday drivers despite gasoline prices hovering above $4.50 per gallon.
The forecast represents a slight increase from 39 million road travelers during the same period last year, though it marks the slowest auto travel growth in a decade outside of 2020, when AAA did not release a forecast due to the COVID-19 pandemic.
Total Memorial Day travelers across all modes of transportation are projected to reach 45 million between Thursday, May 21 and Monday, May 25, according to AAA. This includes 3.66 million air travelers and 2.2 million people traveling by bus, train, or cruise.
Current gas prices stand roughly $1.35 higher than last year’s Memorial Day average of $3.17 per gallon. Average gasoline prices are at their highest seasonal level on record and sit around 50 cents below all-time highs set in June 2022, according to AAA data. The elevated prices stem from the Iran war, which has effectively shut the Strait of Hormuz as the conflict approaches the three-month mark, sending crude oil and refined product prices higher globally.
"Travel demand remains strong, and despite higher fuel prices, many people are prioritizing leisure travel during holiday breaks," said Stacey Barber, Vice President of AAA Travel.
Driving accounts for 87% of Memorial Day travelers, while air travel represents 8% of the total. Domestic flight prices are 6% cheaper compared to last year, with average roundtrip tickets costing $800, based on bookings made before rising jet fuel prices affected airfare.
INRIX, a transportation data provider, forecasts the heaviest congestion on Thursday and Friday between 3pm and 6pm and Monday afternoon. Sunday is expected to be the lightest day for traffic.
Orlando tops AAA’s list of domestic destinations, followed by Seattle, New York, Las Vegas, and Miami. Rome leads international destinations.
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