Memorial Day marks the unofficial start to Summer in America. The school year is coming to a close. People in droves are hitting the road. They head to the beach and the lake. They go to concerts and ballgames. There are barbecues, parades, pool parties and general outdoor fun. But we mustn’t forget its true meaning and purpose.
Memorial Day formally honors the men and women who made the ultimate sacrifice while serving in our military. They swore to protect we the people and our life and liberty. We honor those that gave their life for that cause. The holiday was originally known as Decoration Day. It began after the Civil War and a century later became a Federal holiday in 1971, on the final Monday in May. It’s the day of memory of those who died serving our country.
Memorial Day weekend in America kicks off Summer vacations. This year is expected to see records for planes, trains and automobiles. AAA estimates that 42 Million Americans will travel over 50 miles this weekend. That would be a 7% increase from last year. Another 3.5 Million are expected to fly the friendly skies, an 11% jump from a year ago. It would also eclipse the pre-Covid record for air traffic in 2019. And it’s happening with these inflated airfares. Flights cost 40% more this year. People are paying it. If it pans out, this will mark the third busiest Memorial Day weekend since AAA started measuring traffic in the year 2000.
It won’t stop there. Americans will take buses and trains to the tune of another 1.8 Million. That would translate to a 20% increase from last year. To say Americans are still out and about is an understatement. The Economy reflects it. Travel and entertainment are active. Service demand is still strong.
The good news: Gas prices are lower this year, when the national average was more than $4 a gallon. Today, the national average is $3.57. It’s $4.82 in California. But it was $6 in the Golden State a year ago. There have definitely been some deflationary pressures out there. We just don’t see them in restaurants and pretty much everywhere in the service and entertainment areas.
AAA’s booking data for the Memorial Day weekend indicates Orlando, New York City, and Las Vegas will be the top domestic destinations. There’s also this: Americans are cruising again, as I outlined last week. Port cities in Florida and Alaska, as well as Seattle, will be busy too. There is a 50% increase in domestic cruise bookings compared to last year.
Looking at retail trends, in the 4 weeks leading up to Memorial Day, purchases have spiked for Summer categories. BBQ grills saw an increase of 54%. Sales of sunscreen have doubled. Americans are gearing up for backyard activity and pool parties. Sales of pool equipment and chemicals are up over 100%. Floaties and pool noodles are up 80%. Even though Americans have been buying less stuff in 2023, preferring out of the house experiences, Summer activity in the neighborhood has captured wallet share of late. This is all important to track as we all know consumer spending accounts for 70% of America’s Economy.
Summer in America looks to be eventful. Things have certainly been eventful in Washington. Talks have been off and on, mostly on this week. There just hasn’t been any results. There is no deal yet on America’s debt. June 1st has been the alleged deadline, per the Treasury Secretary. She actually just updated it to June 5th. That said, not everyone believes it. Some don’t seem to even care. The issue is both complicated and self-inflicted. Realistically, the Debt Crisis seems destined to the 11th hour.
The United States is in danger of losing its AAA rating due to “increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit.” That, according to credit rating agency Fitch who put America on negative watch. This is not the first time. Back in 2011, S&P formally downgraded our credit rating. In hindsight, it wasn’t America’s Economy nor its ability to pay its bills that lost its credit rating. It was our government that wasn’t worthy of AAA status. That suit seems to still fit.
The implications of default would be devastating and there’s long been reason to believe that this group in Washington just might allow it. There is a degree of urgency to reach an agreement, but it seems to be less than what pushed Washington to a deal in 2011. This diminished anxiety has allowed for delay.
Quite simply, the Market has remained buoyant in the face of this crisis. In fact, it’s been in rally mode, partying like it’s 1999 on the back of the explosive trend of AI. Artificial Intelligence is real and it’s definitely a game changer. It just seems a little euphoric right now. That tends to be the way. The Stock Market likes a party and investors rush to the scene.
The Market has not forced Washington’s hand like it did a decade ago. The S&P has barely budged compared to the 19% decline in that Summer of 2011. There is a great deal of complacency today which is quite dangerous considering the stakes. Congress clearly doesn’t feel the pressure. And the debt situation today, $31 Trillion and 120% of our nation’s GDP, is far worse. And even getting a deal done, which is expected, it will come with plenty of additional costs. Stay tuned on that. We continue to monitor things extremely closely.
Washington is notorious for kicking the can down the road. As an investor, a business owner and a dad, it worries me that these can-kicking examples keep taking our nation down dangerous paths that at some point become irreversible. There’s no guaranteed outcome in life. We all need to make informed and responsible decisions and be accountable for those actions. Unfortunately, there’s so much of an us versus them mentality. It’s political. It’s social. It’s economic. It all becomes real and behavioral.
I heard a couple of songs on my way to work that gave me pause. It had me reflect on our political divide which sure seems to be driven by very vocal minorities. America tends to harbor a vast silent majority. I thought about the explosion of cable news, social media and reality tv, none of which seem to reflect anything actually real. Opinions are strong from coast-to-coast. They’re not always necessarily informed though. Misinformation runs rampant. What once would be considered unthinkable seems to be commonplace with increasing frequency. It’s like we’ve become immune to the ridiculous, the preposterous and the hate. In some ways, it seems to be actually celebrated.
The lyrics in these songs went directly at some of these themes which I found entertaining and sad at the same time. Tom Wolfe coined the term the “Me Generation” describing the Baby Boomers in the 1970s and 80s. Time Magazine came up with the “Me Me Generation,” labeling the Millennials in 2013. Whatever it is, our society has always been enamored with celebrities. That’s movie stars, reality TV stars and social media influencers, among others. Only 62% of eligible American voters actually vote. At one point, more people watched American Idol than the State of the Union. Think about that for a second.
This is from the song titled “Celebrity” by Brad Paisley, lampooning ridiculous behavior in Hollywood, Washington and beyond:
I’ll get to cry to Barbara Walters when things don’t go my way
And I’ll get community service no matter which law I break
I’ll make the supermarket tabloids, they’ll write some awful stuff
But the more they run my name down the more my price goes up
‘Cause when you’re a celebrity
It’s adios reality
You can act just like a fool
People think you’re cool
Just ’cause you’re on TV
I can throw a major fit
When my latte isn’t just how I like it
When they say I’ve gone insane
I’ll blame it on the fame
And the pressures that go with
Being a celebrity…
It sure seems like people’s popularity increases when they do or say controversial things which gain attention. The other song I heard is by Miranda Lambert titled “Automatic.” I referenced it years ago in a TGIF and recirculate a piece of the lyrics because I love the message. It’s hard to imagine life without Amazon or the iPhone. Innovation has absolutely changed our lives. Much of it for the better. But not all. Patience seems to be a rare commodity these days. Respect is too. Expectations are set on immediate or within 24 hours. But most things don’t work that way. True value can get diminished. Human skills and engagement take time. Relationships are about shared experiences. I share this excerpt from the song:
Hey, what ever happened to,
Waiting your turn
Doing it all by hand?
‘Cause when everything is handed to you
It’s only worth as much as the time put in
It all just seems so good the way we had it
Back before everything became automatic
It gets me every time. It’s not to say that anything was ever perfect. It wasn’t. But the key to our nation’s success is that we strive to be more perfect, knowing we’ll never get there, but it won’t stop us from trying. It’s written at the top of our Constitution. It’s beyond unfortunate that compromise has become such a negative word. Coming together is what makes us great. We understand the why and we rally around the flag for a cause. We’re a part of something special, much bigger than any single one of us. Doing this leads to better outcomes and would assure that our best days lie ahead. That’s what our men and women over two and half centuries gave their lives for. And they were proud to do it. That’s honor. It’s worth living and dying for.
Besides, Billy Joel said it best:
The good ol’ days weren’t always good and tomorrow ain’t as bad as it seems.
We wish you all an enjoyable and meaningful Memorial Day weekend. The Market will be closed in honor of the important day, as will our office. We’ll be back, dark and early on Tuesday.