Research Review EXAMINING CURRENT INDUSTRY TRENDS Dear Travel Colleague: As we approach another summer travel season, there is guarded optimism that the worst is truly over and that we might actually see solid travel performance in the months ahead. However, as has become all too common, some caution flags line our path. Economy Kicking into Gear? It has been more than a year and a half since the recession officially ended, and the U.S. labor market is finally gaining traction and showing signs of strength. Despite higher fuel prices(averaging $3.69 a gallon nationally for regular unleaded on April 5th), continuing turmoil in the Middle East and the latest threepronged disaster in Japan, employers remain confident enough to continue to hire. At 8.8 percent, the U.S. unemployment rate for March dropped to its lowest level in two years and was one percentage point below last November. According to the U.S. Department of Labor, 230,000 privatesector jobs were created in March. Since the recent low set in February 2010, private-sector employment has risen by 1.8 million. Job growth occurred in professional and business services, health care, leisure and hospitality, and mining. The leisure and hospitality industry added 37,000 jobs in March. Despite this welcomed news, some sobering realities remain. The ranks of Americans who have been unemployed for 27 weeks or more remain painfully high, at more than six million. And the labor force has shrunk steadily; just 64.2 percent of adults are either in the workforce or looking for a job. That is the lowest labor participation rate in a quarter-century. In addition, year-on-yearaverage earnings were up only 1.7 percent for the second straight month, insufficient to keep pace with inflation. Further, an unemployment rate of 8.8 percent is still uncomfortably high. And it will take many months of similar payroll gains to recoup the losses of the recent recession. Total payrolls have so far recovered less than 20 percent of the 8.7 million jobs lost. Clearly, there is much more recovery needed in U.S. employment before robust improvement is evident in travel. Oxford Economics and others expect to see additional gains in the labor market in the months ahead, allowing the unemployment rate to fall below 8 percent by the end of 2011. On the positive side, in its third release, the Bureau of Economic Analysis reported a slight improvement in estimated real GDP growth for Q4 '10, revised up from the 2.8 percent reported in its second release to 3.1 percent. Private consumption made the largest contribution to growth, rising by 4.0 percent. Other promising signs that the recovery is building momentum includestrength in the stock market, which wrapped up the first quarter with a 6.4 percent gain in the Dow Jones industrial average. Also positive were recent reports from automakers that auto sales rose in March. And, we have also seen strong growth in the manufacturing sector. But, as usual, there are other conflicting signs in the economic indicators. Housing demand remains weak, with new home sales falling 17 percent in February to a record low and existing home sales