COVID-19

How Will Travel During A Pandemic Affect The Economy?

Thanksgiving kicks off the holiday season, which usually provides a boost to the Brazos Valley economy. A Texas A&M economist predicts this year's revenue will be more conservative.
By Mia Mercer '23, Texas A&M University College of Liberal Arts November 16, 2020

View Of Airport Runway Seen Through Window
A drop in travel due to safety concerns this Thanksgiving is expected to affect the local economy.

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In response to the spread of COVID-19, the Centers for Disease Control and Prevention (CDC) has created safety guidelines for the upcoming Thanksgiving season. A decline in holiday traffic will directly impact the Brazos Valley economy, according to Professor Dennis Jansen from the Texas A&M University Department of Economics.

“The pandemic has had a huge effect on the economy and it’s largely been centered around entertainment, tourism and air travel,” Jansen said. “And although the holiday season typically affects the economy positively, I do not think it will cure all of our ills nor do I believe it will be the same sort of holiday season that we had last year.”

Unlike other cities in Texas, which see a boost in their economies during the summer, the Brazos Valley area sees an increase in employment in the fall and spring, especially during the holiday season.

“During the fall, there is a combination of shopping and traveling for the holiday season and football season going on due to A&M being open,” Jansen said. “So even though we see a rise in employment, this year we are not going to be at the levels we were in 2019.”

Brazos County hotel receipts, monthly leisure and hospitality employment, and Transportation Security Administration (TSA) check point data from 2019 to 2020 shows a drastic shift starting in February. By April 2020, all graphs showed revenue and travel plummeted to almost nothing.

This Thanksgiving, economists predict less than half the amount of flights recorded last year. In 2019, 7,704 enplanements were recorded in the Brazos Valley in October, and 8,306 enplanements were recorded in November. In 2020, only 2,764 enplanements were recorded in the Brazos Valley in October with even fewer predicted for November.

“In April there was virtually no travel, but now we’re back to about 35-40 percent of where we were a year ago,” Jansen said. “We’ve made a big improvement since April, but we’re nowhere near where we started from since we are still functioning and obtaining revenue at less than half that compared to 2019.”

Although studies have proven the holiday season positively affects the global economy, it will take some time for the economy to return to normal. For example, after the Great Recession in 2008, it took nearly three years for employment to return to where it was before.

“The Congressional Budget Office has a forecast of GDP total output of the economy, and because we’ve shut down restaurants and bars and big entertainment events, the GDP has fallen a lot,” Jansen said. “When we opened back up a little bit, we had a big increase in GDP output. If you look at the congressional budget office forecast, they estimate having us return to potential output, (output where you’re at full employment) in about three years.”

According to Jansen, this recession is a unique one. This is because it started with a virus which led to individuals choosing not to travel due to safety and health concerns, which led businesses, restaurants and sporting events to shut down. However, as these parts of the economy reopen, we are beginning to see a rise in employment and general economic activity, especially as the holiday season approaches.

“When we relax restrictions, we see a bit of a bounce in the other direction; the unemployment rate goes down and the output rate has gone up,” Jansen said. “ So the more you relax the restrictions we’ve imposed on the economy and business operations, the faster we can see a recovery. The problem with that, however, is how it would conflict with public health concerns, like a big increase in the infection rates.”

While the Brazos Valley’s revenue won’t be as high as last year, the revenue brought in by travel this holiday season will nonetheless be a step toward normalcy.

“The holiday season will be good for the economy, even if there won’t be as much travel or money to be made from getting hotel rooms or rental cars,” Jansen said. “The economy certainly won’t be the same as it was in the past, but it will still be better than not having Christmas or Thanksgiving at all.”

This article by Mia Mercer originally appeared on the College of Liberal Arts website.

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