Starting in early November 2021, the US government will lift an 18-month ban on the European Union and the United Kingdom travelers permitting only those vaccinated. The ban has been in effect since March 2020. Ex-President Donald Trump imposed travel restrictions when the pandemic broke out in February 2020. Now, financial advisors celebrate the lift on the regulation as something highly beneficial for the US economy laying their trust in reinvigorating it.
Economic consequences of the pandemic
The COVID pandemic and the lockdown triggered a huge stop sign for the economy. Many business projects, national and international, went down the drain. Strict limitations, health regulations, etc., inescapably gave birth to many US commercial and industrial areas suffering a blow as a direct consequence of the virus. Small businesses, technology, agriculture with the crop’s cultivation, and the manufacturing industry were those domains that suffered the most due to the confinement and social distancing since workers could not execute the majority of these jobs from a home office.
Seeing the economic order fragility, many were fearing, reasonably, that another financial recess was upon us.
Let’s talk numbers
One week after former President Trump passed the law on foreign business travels to the US, the Global Business Travel Association reported a loss of approximately $185 million in business travel bookings. Before the ban, business travels had been steadily increasing. Nevertheless, according to the US Travel Association, the general spending in international travel declined by 76% (opposed to 34% for domestic travel). Business travel spending also suffered a blow and decreased by 70% (compared to 27% for leisure travel) in 2020. As you can imagine, this caused America to lose about 71,000 jobs and approximately five billion dollars in gross domestic sales.
Furthermore, the economic repercussions withheld the development of tourism as well. According to the New York Times, Los Angeles alone suffered a loss of about $740 million in tourism. The Global Business Association reported that around half of its members considered reducing their business flights to the US in the next three months. Companies were afraid that another ban would leave them stranded on US soil. As you can tell, the ensuing ban caused an overall economic uncertainty.
Estimates were quick to arrive. The Congressional Budget Office (CBO) reported in the summer of 2020 that they predicted the restrictions would lessen the American economy by about 8 trillion dollars in the next ten years. In other words, by approximately 3 percent of the entire US GDP.
In the early estimates done by the International Air Transport Association at the end of 2020, the airlines were predicted to lose about $100 billion in 2021. Additionally, the American Hotel & Lodging Association reported that due to the restrictions, “nearly two out of three hotels are at or below 50 percent occupancy…and four out of 10 hotel workers remain unemployed,” The deficiency in tourism affects almost every domain. For instance, the World Travel and Tourism Council (WTTC) foresaw a deficit of approximately $198 million daily if the current border restrictions continue. During the first three months after the ban, the National Restaurant Association assessed a loss of $120 billion in restaurant and foodservice industry sales.
The EU ban and the US tourism industry
Looking strictly at the tourism industry, the US maintained the EU ban for the European countries with the biggest economical contribution to the US. This led to a dramatic decrease in GDP compared to the numbers we were seeing in 2019, before the pandemic hit.
- UK – 8%;
- Germany – 4%;
- France – 3%;
- Italy – 2%.
In other words, taking the UK alone, based on that percentage, the US economy still loses around $40 million each day, which adds up to $283 million each week and $1.2 billion each month. No estimations have been made on what will happen once the travel ban is lifted as the economy’s stability shouldn’t be trifled with, especially in times like these.
Across the US, around 16.5 million jobs depended on travel and tourism in 2019. That means 10.5% of the overall US employment. Additionally, from European business travel 2019 gained $358 billion which is 30% of the total spend. The WTTC discovered that the US GDP recorded a decrease from $1.87 trillion in 2019 to a total of $1.1 trillion in 2020 from the tourism and travel sector, even if their predictions estimated a total loss of 3.4 billions which was obviously exceeded. This led the Council to put more pressure on the current administration to lift the ban and reopen the country.
Effect of EU ban on States
Not all US states felt the same impact due to the EU ban. While Wisconsin, North Carolina, Texas and Ohio barely experienced a GDP drop between 0.35 to 0.26 per cent, others were hit harder. In Nevada, the GDP dropped by 9.55%, followed by the District of Columbia with 6.4%, New York with 3.68% and Florida with 3.36%.
The housing market held the torch for hope
No economic setbacks can stop this train from hitting its target! Noteworthy is that the real estate market boomed in US cities like a beatbox during dire straits. An above the average positive example is Miami, where they established a housing market breaking records! Since remote work became a thing, the US population decided to change its location favoring a more Covid-friendly free space, higher mobility, and lower taxes. They found all of these in suburbs, towns, and cities, which previously did not figure on anyone’s wishlist.
And now comes the twist. Based on the most positive estimations, most of the city population, who once migrated from the polluted, jam-packed, and tax-stricken cities to suburbs and smaller towns, is about to return to the metropolitan area. After all, big cities feature hard-to-resist advantages, such as a more diversified job market featuring better-paying careers. However, people considering this option should also know the major snags of living the big city life.
In such troublesome times, the housing market seems to be the sole “reliable” business, and by the end of this article, you will discover the genuine reasons behind this bold statement.
A new beginning heralded: enter the Covid vaccines
Market analysts and specialists hope for a real economic resurgence now that Covid vaccines are available, mainly in the domain of real estate. Moreover, putting an end to the virus will re-boost the domestic economy and international financial relationships. The lift on the ban for specific travelers will optimistically herald this rehabilitation.
The positive aspect of the vaccine on the US economy foreshadows an even larger development once foreign investors, business people, and tourists make a comeback to the American market.
The procedure of entering legally to the US
Presently, and over the last 19 months, only US citizens and foreign travelers holding special visas could come to the United States from almost every European country. Nevertheless, a well-thought set of procedures related to public US health safety must come before the ban’s effective cancellation.
First and foremost, only fully vaccinated foreigners are allowed to enter the soil of the United States for the first time in over a year! Jeffrey Zients, in charge of the COVID-19 Response Team in the White House, highlighted that foreigners would have to prove their vaccination and a negative Covid test they took three days before traveling to America. Nonetheless, the list of accepted vaccines hasn’t been published yet however the CDC did mention that it will allow WHO approved vaccines as well, so not only FDA approved vaccines are accepted. Suffice to say that the frontrunners, such as Pfizer, Moderna, Johnson & Johnson, AstraZeneca, are sure winners! Exceptions to the vaccine policy will be the children who haven’t come of age required to the vaccine administration, but those older than 2 will require a negative Covid test on entry.
A piece of extra good news is that neither quarantine is required, nor staying 14 days in a transit zone, such as the Dominican Republic or Mexico, before coming to America!
Another condition to enter the US realm is that the Centers for Disease Control and Prevention (CDC) will collect personal data (phone number, email address) on those arriving in America in the framework of a contact tracing order. The so-called “public health surveillance system” will look into a travelers’ medical history if they might have been exposed to COVID, therefore aiding local and state health officials.
In addition, the White House representatives were quick to stress that they concentrated on admitting individuals posing no health threat to the US citizens rather than passengers from specific countries. With this decision, Washington addressed EU concerns that the US hadn’t reciprocated the non-ban policy for American travelers longtime in effect in Europe.
Business domains welcoming the lift
Boris Johnson, the British prime minister, put it succinctly, yet touching the right spot: “It’s a fantastic boost for business and trade, and great that family and friends on both sides of the pond can be reunited once again.” (source: Republic World)
One vocal economic group already saluting the decision was the Airlines for Europe lobbyists. They expressed their satisfaction and hoped to return to normalcy by improving the battered transatlantic routers and the airline industry.
By all means, specialists anticipate tourism on both sides of the Atlantic to experience an unprecedented boom. Lifting the ban will set the ground for family reunions,and spending time with friends and relatives in the US during the holiday season. The great expectations of the business representatives mentioned above are not unfounded since around 70% of the European adult population has been vaccinated against the virus, according to September 2021 statistics.
The British Ambassador to Washington, Dame Karen Pierce, also shared her thoughts on the historic occasion. She outlined the economically beneficial advantages of the ban being lifted: “… more British holidaymakers can spend their hard-earned pounds in the American tourism sector, and more business activity can boost both of our economies.” Let’s not forget about citizens from other European states who will find an opportunity to return or commence brand new investment plans on US soil, especially in the housing market. Speaking of which, keep on scrolling …
Foreign investors rediscover US properties
We expect the real estate market to thrive even more, among others, such as a rise in gold and stock market transactions. Since traveling is bilateral, US citizens can also browse through international housing investment possibilities more quickly.
On the other hand, business people from the old continent never lost track of the prosperous US real estate business. Therefore, many of them are eager to find the perfect housing investments across the ocean. This likable assumption seems to be reinforced because the US economy got back on its feet from the pandemic-induced economic recession quite rapidly. Furthermore, house values are relatively low now in some cities, but be sure they will gradually rise.
As opposed to America, many European countries are still struggling to fully recover from the crisis. In other words, although there is a certain amount of foreign private capital, there is a gap in the investment portfolio. Before going forward, we must draw your attention to a quintessential business attitude one should assume when dealing with foreign investors in US property.
Consequently, and in a nutshell, American real estate agents can now focus on foreign investors as a niche. They can fill the economic gap; with a fair attitude and benefit from business transactions with European foreigners!
Lifting the ban for vaccinated European Union citizens is the first crucial step to reinstate global economic normalcy. As a result of President Trump’s urgent regulations, many families split apart on separate continents could not reunite, or the reunion was a complex process. Furthermore, many significant US industries suffered from these restrictions, and, albeit they did not go bankrupt strictly speaking, they experienced a substantial loss in their revenue.
Now that the ban shall no longer be in effect, major US commercial enterprises will experience a blood transfusion. The sure thing to anticipate is a considerable flux of European people re-entering and journeying throughout America. Discover what they set out to achieve in the US, and you’ll have success in your hands! Now, targeting foreign tourists, travelers, and business people searching for unique experiences might just be the perfect bet for you.