Decline in Tourism May Be a Blessing for the U.S.

The number of American tourists visiting France has decreased, despite the allure of the Eiffel Tower. Thibault Camus / AP

After traversing a mountain path 6,000 feet up in the Swiss Alps last week, where cows with clunky bells far outnumbered people, I stumbled into a bare-bones restaurant—and was shocked to see a college classmate whom I hadn't seen in at least 15 years. The surprise wasn't so much that I saw someone I knew—we all have tales of extremely random encounters in out-of-the-way places. Rather, it was that I ran into an American at all.

I've spent the better part of 10 days investigating vital economic issues, including the impact of European fiscal austerity in France, the sources of the strong Swiss franc, and the ultimate Swiss mystery: how the cost of food rises (yet the quality falls) the higher you trek into the Alps. But in my journey, I've missed seeing a few things: multitasking French service workers, solicitous Swiss, and, my college classmate notwithstanding, American tourists. This summer, it's An American in Paris, not A Horde of Americans in Paris.

Time was, suffering the lines at the Louvre or trundling onto European trains in the summer would mean braving busloads full of American tourists—seniors, middle-aged churchgoers, high-school students—or gaggles of college kids equipped with backpacks and copies of Let's Go Europe. But this year? Not so much. In the first quarter of 2010, according to the International Trade Administration, U.S. air departures to Europe were down 6.7 percent from the first quarter of 2009.

Since the economic crisis hit, in fact, Americans have generally decided to stay home. According to the ITA, total outbound air departures from the United States fell 1.4 percent in 2008 and 1.8 percent in 2009. That's a marginal difference. But journeys to Europe—which require expensive airfare and swapping weakened dollars into stronger euros—have fallen by a much larger amount. Departures to Europe were down 6.2 percent in 2008 and 4.2 percent in 2009, and were off another 6.7 percent in the first quarter of 2010. Should that decline hold up, 2010 would see U.S. visits to Europe down 17 percent from 2007 levels.

This is clearly bad news for souvenir hawkers, street performers, and the proprietors of the few brasseries that soldier on through the August doldrums in Paris. And it's a sign of the malaise and fear that have gripped U.S. consumers since the onset of the Great Recession of 2008–09. Trends in foreign tourism are pretty good coincident signs of a nation's economic confidence. When you and your neighbors are feeling flush and optimistic, and your currency has some swagger, you're much more likely to plot an ambitious foreign jaunt. Given the slowdown in growth, the punk job and housing markets, and the generalized fear of the future, splurging is out—up and down the in-come scale. For some, last year's week in the Italian Riviera has been replaced by an SUV ride to Lake Michigan. Many Americans are rediscovering the charms of their backyards.

Fortunately for America, plenty of foreigners are feeling confident. And that—combined with the trend toward "staycations"—could be good news for the U.S. economy, and for its gaping trade deficit. Tourism is a service, and an important component of trade. When an Indian technology executive visits New York and spends money at the Gap and the Marriott, that's an export. When an American spends money at the Uffizi Gallery in Florence, that's an import. And as the volume of Americans traveling abroad has fallen, the number of foreigners visiting the U.S. has risen. Inbound arrivals from overseas began to rebound in the fourth quarter of 2009, and were up about 15 percent in the first quarter of 2010 from the first quarter of 2009, to about 6.9 million arrivals. This summer, New York was swamped by visitors from the corners of the earth that are growing much more rapidly than the U.S.—Brazil, India, China, even Europe. One could walk the length of the High Line, the once derelict elevated railroad track turned chichi promenade in Manhattan's meatpacking district, without hearing a word of English spoken.

With outbound tourism down and inbound tourism up, the sector is helping to put a dent in the persistent and massive U.S. trade deficits: in the first half of 2010, tourism generated a $14 billion trade surplus for America, up 29 percent from the figure for the first half of 2009. Overall, the spending trends may be signs of America's relative economic decline. But for a hurting U.S. economy, they also hold some promise.

Daniel Gross is also the author of Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation and Pop!: Why Bubbles Are Great For The Economy.