Economy Watch: Memorial Day Travel Up, Gas Prices Down

Peppier consumer sentiment may be encouraging Americans to take the road. Just ahead of the holiday weekend, AAA predicted that 34.8 million Americans would travel 50 miles or more from home during that period (May 24 to May 28), an increase of 1.2 percent compared with the Memorial Day period in 2011. About 88 percent of all travel for the weekend would be by car, representing 30.7 million people driving somewhere, compared with 30.3 million last year.

“American consumers faced a new challenge this year as steadily increasing gas prices throughout the spring significantly squeezed many household budgets,” Brad Roeber, AAA Chicago regional president, noted in a press statement. “[But they] will still travel during the Memorial Day holiday weekend. Many will compensate for reduced travel budgets by staying closer to home and cutting entertainment dollars.”

Separately, AAA reported in its Fuel Gauge Report that the average price of a gallon of regular gas on Monday was $3.641, a drop of almost 5 cents from a week earlier, and a drop from $3.823 a gallon a month ago. Compared with a year ago–not precisely Memorial Day weekend, but close—the current price for a gallon of regular is nearly 16 cents less.

Greece bails out banks, Spain might

Reuters reported over the weekend, citing unnamed sources, that Spain is considering recapitalizing the sickly Bankia with government bonds, which would in turn be used to get actual money (euros) from the European Central Bank. Bankia is the Spanish bank hardest-hit by the massive popping of the housing bubble in that country, and last week asked the otherwise hard-pressed Spanish government for a bailout of 19 billion euros ($24 billion). It isn’t clear yet whether the ECB will want to provide such a bailout to the Spanish banking sector, however.

Also over the weekend, investors seemed pleased by reports that the pro-bailout party in Greece is polling better ahead of the next round of elections than during the recent round of elections, pushing the euro and shares in euro-zone companies up. On Monday, the Greek government bailed out the four largest banks in the nation by giving them 18 billion euros ($22.6 billion) via bonds from the Hellenic Financial Stability Fund, which was set up by the euro-zone bailout for this purpose. The move might shore things up for now, but as usual with the Greek economy, the mid- and long-term picture are still fubar.

Wall Street was closed for the Memorial Day holiday on Monday, after ending Friday down. The Dow Jones Industrial Average was off 74.92 points, or 0.6 percent, while the S&P 500 lost 0.22 percent and the Nasdaq declined a slight 0.07 percent.