For those of you who would prefer to listen:
We are nearing the halfway point for 2026. Summer is just around the corner. Graduations are in full swing. Time sure flies. Memorial Day officially kicks off the Summer driving season. Fuel consumption usually spikes this time of year. And we all know the price at the pump is sky high.
AAA estimates that 45 Million Americans will travel at least 50 miles from home over the Memorial Day weekend. If so, that would be a 0.4% increase from last year, breaking another Memorial Day record. Last year was an all-time high. This would also mark a 5% increase from the number of people who traveled over the 2019 holiday weekend. That was a then all-time high before Covid froze those travel trends.
The vast majority of people, 39 Million of them, are expected to drive despite the substantial rise in gas prices. That would also be an all-time record for automobile traffic. The most popular destinations this year: The Beach and the Lake. That’s no surprise. But the cost of getting there might be. Hitting the road is a lot more expensive these days. Gasoline is averaging $4.55 a gallon today. That’s a 44% increase from the $3.17 a gallon last Memorial Day. It’s the highest since 2022. That was immediately following Russia’s invasion of Ukraine. And for we Californians, the price of gas is well north of $6. I explained why a few weeks ago. Importantly, over 99% of gas stations in America are independently owned and operated. Big Oil doesn’t own the gas stations. It’s mostly small business owners that do.
Friday afternoon is expected to be the most crowded on the highways. If you can, hit the road early. The same applies for the Monday return. The earlier the better, from a traffic standpoint. The roads across America Monday evening will be jammed. Police are expected to be in full force, making sure people drive responsibly.
The friendly skies will be full, too. Another 3.7 Million people plan to fly to their destinations. That would also be an increase from last year. Because many people booked their flights before the Iran conflict, airfares don’t yet reflect the rise in the actual flight costs. It’s the spike in jet fuel prices driving that. AAA says the average ticket for a flight this coming holiday weekend is $800.
The price of Oil surged this Spring. West Texas Intermediate crude is up 68% since January, heading into the weekend at $96 per barrel. It was $57 to start the year. Jet fuel prices have jumped a whopping 73%. Americans have paid a cumulative $45 Billion more on gas compared to a year ago. 45% of those barrels go to gasoline. Another 9% are refined into jet fuel. The higher prices at the pump steal discretionary Dollars from other areas in the Economy. It’s like a phantom tax. Retailers have already recognized the slowdown in purchases.
So far, the Airlines have largely been eating the higher costs. That’s about to change. Airline companies spent an additional $1.3 Billion on fuel in March alone, compared to a year ago. In response, the Airlines have reduced the frequency of flights on some routes. They’ve also grounded or retired older or less fuel-efficient aircraft. Other measures have been the postponement of aircraft deliveries, as well as raising fees for checked bags and eliminating food and beverage service on shorter flights. Those friendly skies don’t seem as friendly as they used to.
Despite all of this, travel demand remains strong. Leisure travel is still highly coveted. Americans still plan to take their Summer vacations. According to AAA, the top domestic destinations for air travel this Memorial Day weekend are Orlando, Seattle, New York, Las Vegas, San Francisco and Miami. The top international destinations are Rome, Vancouver, Paris, London, and Athens.
For the vast majority of Americans staying stateside, we will certainly notice the higher costs in food prices. Higher fuel prices naturally lead to higher food prices. It makes packaging and distribution more expensive. Grocery prices are up over 10% compared to last year. Those barbecues are going to be pricier.
Grocery stores will likely be raising prices a bit more this weekend in hopes to capture some more profitability after being squeezed with higher costs. Walmart just lowered its outlook this week for the rest of the year. The nation’s largest retailer identified the high gas prices are weighing on Americans’ ability to spend. Evidence of this came at Walmart gas stations and its partnerships with Exxon Mobil and Murphy USA. With hundreds of stations across the country, the average fill was under 10 gallons for the first time since 2022. Americans aren’t filling their tanks due to the high prices. They’re just doing enough to get by day to day.
How much higher will food cost you might wonder? Well, the price of ground beef is up 19% on average across the country. Pork, chicken and hot dogs will be cheaper options that still satisfy a hungry crowd. Our financial planners will recommend that. Eating healthy keeps getting more expensive. Fresh vegetables on average cost 7% more than last year. Hamburger buns are seeing a 30% increase. Would you believe the price of pickle relish is up nearly 50%?!? $6 for a bag of chips? You’ll probably see that this weekend. Memorial Day also tends to kick off watermelon season. Since it’s early, supply struggles to meet demand, which sends prices higher. A $5 melon might be closer to $8 this weekend.
While we take time out to enjoy the holiday weekend, it’s most important to remember why. Memorial Day is the day set aside to honor our brothers and sisters who gave their lives protecting our nation. Memorial Day became a Federal Holiday in 1971. But its roots run much deeper. Memorial Day was born out of the Civil War, which claimed more American lives than any other military conflict. The Federal government declared Waterloo, New York, the official birthplace of the date for honor. The city first held an event in 1866, where businesses closed, and the grave sites of fallen soldiers were decorated. Many other cities and towns followed suit. Two years later, a Civil War veteran named John Logan called for a nationwide day of remembrance. He called it “Decoration Day”. The day of memory was May 30th.
Following World War I, Decoration Day evolved into Memorial Day to honor all fallen soldiers in military battle. Decades later, in 1968, Congress passed the Uniform Monday Holiday Act. This established Memorial Day as the last Monday in May in order to create a 3-day weekend for Federal employees. The change was cemented in 1971, declaring Memorial Day a Federal holiday, as it stands today. One thing every American can agree on: Our military is elite, and our service men and women who risk their lives for our nation are true heroes.
The Market will be closed on Monday, in observance of Memorial Day. Our office will be too. Please join us in remembering the fallen heroes who made the ultimate sacrifice for our country.
Have a nice weekend. We’ll be back, dark and early on Tuesday.
Mike
