Living in Washington, D.C. is a constant reminder of the draw of our nation’s capital for tourists from all over the world. When foreign visitors come to the United States, they spend money on hotels, restaurants, donuts, and other U.S. goods and services. This influx of cash helps our economy, but by how much?
With today’s release [1] of the June international trade in goods and services data, we are better able to quantify just how much money foreign visitors spend when they visit the U.S. We’ve talked many times before about the value of goods exports to our economy, but U.S. services exports are also a vital engine of economic growth and are responsible for a huge infusion of cash into the country.
In fact, services exports bring tens of billions of dollars across our borders each month —$49.6 billion in June to be exact—and the U.S. had a trade surplus in services of $14.5 billion in June alone and a surplus of $145.8 billion in 2010. Although many may not realize this, the money foreign visitors spend here is included in our export totals. About 25 percent of our service exports come from travel and tourism, as measured by the “travel” and “passenger fare” export series [2] in Commerce’s monthly trade release.
According to BEA’s Travel and Tourism Satellite accounts [3], 5.4 million jobs are directly supported by the tourism spending of domestic and international visitors, with an additional 2.2 million jobs indirectly supported. These jobs span the accommodations, transportation, food service, recreation, entertainment and shopping industries. And their growth of 1.7 percent in the first quarter of 2011 over the same period of last year was nearly twice the growth seen in overall payroll employment.
Travel and tourism data can be tricky, though. Travel is counted as an export of services, but it actually measures both the goods and services purchased by foreign travelers in the United States. Also, unlike most other trade data, it doesn’t measure foreign spending on a specific type of good or service, but rather the range of goods and services that travelers purchase when on the road, including food, lodging, recreation, gifts, entertainment and other incidentals. Spending on airline passenger fares is also listed separately in the international trade release. There is a subtle yet important conceptual difference between passenger fares and travel exports. Passenger fares do not measure the ticket spending of all foreigners that fly into or out of the United States, but rather the tickets purchased by foreign travelers for travel to or from the United States on U.S. carriers. Similarly, passenger fare imports show the spending of U.S residents on tickets overseas only if they fly on foreign air carriers. So, if the cast of Jersey Shore traveled on Alitalia to film the current season, their tickets represent an import. If they flew on Continental, however, the tickets are not an import. In the first case, U.S. dollars leave our country; in the second, they do not.
The figure above shows international visitors’ spending here and our spending. In May, we reached a new all-time high in exports of travel and passenger fares; many of the same factors that underlie our strong goods exports also explain our magnetic tourism draw: a great product and a relatively weak dollar. Tourists visiting the U.S. come from all regions of the world. So far this year, the top overseas tourist-generating countries [4] include: the United Kingdom, Japan, Germany, Brazil, France, South Korea, Australia, and the People's Republic of China. U.S. spending on international travel (red line in Figure 1) has also been increasing, although more slowly than spending by foreigners traveling here. Interestingly, we’ve seen our spending increase abroad at the same time that the number of U.S. citizens traveling overseas has declined – actually, it has fallen for three straight years. This tells us that our spending is increasing, which is largely a function of the weak dollar.
Recognizing the value of international tourism to the United States is important to reaching a more complete understanding of our nation’s economy. As you can see, on many levels, the United States has a lot to gain from opening its doors -- and sharing donut lines -- with international visitors.
~Mark Doms, Chief Economist, U.S. Department of Commerce
August 11, 2011
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