TBR Index Shows Industry Contribution To Economy

<B> TBR Index Shows Industry Contribution To Economy</B>

By David Meyer

The Travel Business Roundtable index of leading economic indicators issued last week showed a healthy 0.5 percent rise for July, continuing a growth trend in the industry that began in December 1996.

The acceleration in industry growth as reflected in the index since then has been significant, particularly when compared to the March 1992 to December 1996 period. The average annual rate of change in the TBR index doubled during the recent growth phase to 7.5 percent from 3.72 percent in the previous period.

James Howell, developer of the TBR index, president of Boston-based The Howell Group and former chief economist of Bank of Boston, noted that this rate of increase is unlike the behavior of most economic performance measures, which slow as the business cycle growth period matures. "Unquestionably, this is an important industry characteristic," he said, "a characteristic that makes it very clear that the travel and tourism industry is now making an even greater contribution to the country's growth rate than was the case during the 1992-1996 period."

The advance in the latest data came from growth in six of the nine economic sectors that make up the index: total travel agent sales from the Airlines Reporting Corp., revenue passenger miles from the Air Transport Association, the hotel/motel revenue index and occupancy rates from Smith Travel Research, rental car travel and mileage per day index from a major car rental company, and personal consumption of services--excluding housing, utilities and medical--from the Bureau of Economic Analysis.

At the same time, the figures on air transportation and transportation service industry employment from the Bureau of Labor Statistics were flat. Modest decreases in growth were reported in the consumer confidence index from the Conference Board and retail sales for eating and drinking establishments from the Department of Commerce and the Bureau of Census.

The U.S. index of leading economic indicators also was strong in July, with a 0.4 increase. "The stronger advance in July does not alter our view that a slowing in the pace of economic activity in the economy as a whole is now taking place," Howell said.

The change in GDP in the second quarter amounted to about 1.5 percent--"a modest increase and in sharp contrast to the more than 5 percent increase in the first quarter," he added. "As the adverse consequences of the turbulence in domestic and international equity markets are factored into the August and September data, the shift to slower growth will most likely become more clearly evident. But note well, we strongly believe that there is little, if any, evidence that this slowing will pull the economy into a recession.