Dream Hotel Group CEO Jay Stein said on Wednesday he is worried about a possible recession and about “people being nervous about spending money.”
I made the comment on “Cavuto: Coast to Coast” one day before the Bureau of Economic Analysis is set to release advance estimates of second quarter gross domestic product (GDP), the broadest measure of goods and services produced across the economy.
A recession refers to a contraction in GDP activity for two consecutive quarters.
It was first revealed in late April that the US economy cooled markedly in the first three months of the year, as snarled supply chains, record-high inflation, and labor shortages weighed on growth and slowed the pandemic recovery.
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The Bureau of Economic Analysis said late last month in its third and final estimate that the US economy contracted more than previously thought in the first quarter of this year.
Real GDP contracted by 1.6% in the first quarter, more than the previously estimated 1.5% contraction, according to the bureau.
The contraction marks the first drop in GDP since the second quarter of 2020 during the COVID-induced recession.
Earlier this month it was revealed that inflation accelerated more than expected to a new four-decade high in June as the price of everyday necessities remains painfully high, exacerbating a financial strain for millions of Americans.
The Labor Department said that the consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rent, rose 9.1% in June from a year ago. Prices jumped 1.3% in the one-month period from May. Those figures were both far higher than the 8.8% headline figure and 1% monthly gain forecast by Refinitiv economists.
The data marked the fastest pace of inflation since December 1981.
Price increases extended across the board: Energy prices rose 7.5% in June from the previous month, and are up 41.6% from last year. Gasoline, on average, costs 59.9% more than it did one year ago and 11.2% more than it did in May. The food index, meanwhile, climbed 1% in June, as consumers paid more for items like cereal, chicken, milk and fresh vegetables.
On Wednesday, Stein discussed the positive and negative trends he has witnessed as it pertains to his hotels amid the challenging economic backdrop.
While he noted that a potential recession is a concern, the business leader highlighted that his hotels bounced back from the pandemic quicker than expected.
Stein noted that his six hotels in Manhattan, which include the Dream Hotel downtown and in midtown, were “hit hardest” during the pandemic. He pointed out that many of his hotels were closed for about a year and reopened last May.
“I never thought we would bounce back this quickly,” he told host Stuart Varney. “So it has been a great return.”
Stein did, however, acknowledge that there were a “couple of bumps in the road” given the different variants that had surfaced.
“But, all in all, we’re just about [at a] 2019 pace so I would have taken that any day of the week,” Stein continued.
He also noted that business from international travelers “is not back nearly as much as we would like to see it.”
“It started to bounce back and then with different variants it slowed down a bit,” he said.
“There is tremendous pent-up demand, especially from Europe to come to the US from the UK, which is probably our biggest feeder market. So there is great opportunity there for us to enhance,” Stein added.
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He also pointed out that Americans are “now getting comfortable going back over to Europe” and so his hotels abroad have been experiencing more business and, therefore, the lack of foreign domestic travelers “balances itself out.”
FOX Business’ Megan Henney contributed to this report.