summer travel costs surge, low-income consumers may stay home

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Amid rising inflation from Iran's geopolitical conflict and increasing travel expenses, this summer may witness another wave of staycations.

Market Analysis

According to a recent consumer survey released by Bank of America on Thursday, this travel season is showing a K-shaped divergence:

Nearly 40% of low-income households have no summer travel plans; Bank of America card transaction data shows that travel-related spending among low-income groups has declined year-over-year since 2026.

In contrast, travel spending among middle- and high-income families remains robust.

The survey revealed: about 30% of respondents stated that rising oil prices won't change their summer travel plans; the rest plan to reduce trip frequency or cut budgets on accommodations and other expenses.

Comprehensive Travel Cost Inflation

The NerdWallet Travel Price Index shows that current average U.S. travel costs have risen 9% year-over-year.

This index references various travel categories tracked by the Consumer Price Index, including airfare, lodging, dining, and car rentals.

Itemized increases:

Over the past 12 months through April, overall prices surged 3.8%.

Travel Stock Market Overview

Last month, against the backdrop of weakening consumer purchasing power and rising inflation concerns, the travel sector underperformed the S&P 500 index.

Markets are already pricing in weaker Q2 earnings for the sector, despite it being peak summer travel season.

Individual stock performance over the past month:

The S&P 500 index rose 8% during the same period.

Key Conclusions

Conflict between the U.S.-Israel and Iran has driven up prices across various goods nationwide; funds originally earmarked for summer travel are now forced to cover higher gas and food costs.

Citi analyst Jon Tavor recently released new data: in April, the comprehensive purchasing power (net amount after wage and employment growth offset inflation) for all consumers earning under $50,000 annually turned negative. Middle-income earners making $50,000–$70,000 spend over $90 more monthly on essentials than last year, with nearly $75 of that increase coming from the past two months alone.

Tavor warned: purchasing power growth across all income levels is slowing broadly.

Editor: Guo Mingyu

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