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Research: Coronavirus Could Cost U.S. Economy $809 Billion

A new analysis released Tuesday by the U.S. Travel Association projects that decreased travel due to coronavirus will inflict an $809 billion total hit on the U.S. economy and eliminate 4.6 million travel-related American jobs this year. Of these jobs, 74,000 are on the “travel planning” side. (Other groups include food services, which will see the greatest loss in jobs, lodging, recreation and amusement, air and other transportation, and retail.)

The numbers, prepared for the U.S. Travel Association by Tourism Economics, were presented by U.S. Travel Association President and CEO Roger Dow at a Tuesday White House meeting with President Donald Trump, Vice President Mike Pence, Commerce Secretary Wilbur Ross and other travel leaders.

"The health crisis has rightly occupied the public's and government's attention, but a resulting catastrophe for employers and employees is already here and going to get worse," Dow said. "Travel-related businesses employ 15.8 million Americans, and if they can't afford to keep their lights on, they can't afford to keep paying their employees. Without aggressive and immediate disaster relief steps, the recovery phase is going to be much longer and more difficult, and the lower rungs of the economic ladder are going to feel the worst of it."

Dow noted that 83 percent of travel employers are small businesses. Immediately, the U.S. Travel Association expects March and April travel sector revenue will be 75 percent below normal; however, gradually lessening declines are expected in the summer as travel restrictions are loosened.

Other notable findings in the travel impact analysis: 

  • Total spending on travel in the U.S.— transportation, lodging, retail, attractions and restaurants—is projected to plunge by $355 billion for the year, or 31 percent; this is more than six times the impact of 9/11
  • The estimated losses by the travel industry alone are severe enough to push the U.S. into a protracted recession—expected to last at least three quarters, with Q2 2020 being the low point
  • The projected 4.6 million travel-related jobs lost would, by themselves, nearly double the U.S. unemployment rate (3.5 percent to 6.3 percent)

"This situation is completely without precedent," Dow said. "For the sake of the economy's long-term health, employers and employees need relief now from this disaster that was created by circumstances completely out of their control."

At the Tuesday White House meeting, Dow urged the administration to consider $150 billion in overall relief for the broader travel sector. Among the suggested mechanisms:

  • Establish a Travel Workforce Stabilization Fund
  • Provide an Emergency Liquidity Facility for travel businesses
  • Optimize and modify SBA loan programs to support small businesses and their employees

The U.S. Travel Association analyzed two scenarios for shortening the duration of losses. The first, Full Recovery Begins in June, assumes each month from June through December offers a potential average gain of $17.8 billion in GDP. Total benefits would tally $100 billion in travel industry revenue and 1.6 million jobs restored. Scenario 2, 50 Percent Recovery Begins in June, assumes that a recovery is accelerated by 50 percent (relative to expected performance) beginning in June. In this scenario, each month offers a potential gain of $8.9 billion in GDP; total benefits would tally $50 billion in travel industry revenue and 823,000 jobs restored.

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