While there are headwinds—reaching a peace deal with Iran, oil prices and government funding—there also are positive signs for the economy. Unemployment is steady. There’s an uptick in spending, especially for hotels and travel. Corporate earnings have been positive. All that points to encouraging signs for the rest of 2026. Learn more in this issue of Connecting the Dots with ALHI President and CEO Michael Dominguez, a monthly series that examines issues in the global economy that will help ‘connect the dots’ not only in business, but in life as well.
Michael Dominguez: Hi, thank you for joining us for this episode of Connecting the Dots and I really wanted to talk about the economic conditions that we are seeing coming out of first quarter. At the time of this filming, which is in mid-April, the economy candidly is doing okay.
We continue to have mixed data. We saw in the employment numbers, January was up, February was down, and then all of a sudden March beat all expectations, and if you look at the first quarter, we're averaging what has now been normalized as needed growth from an Ernst & Young study of about 50,000 jobs per month. It's right where we're sitting through the end of March and that is telling us that overall, things are pretty healthy.
This morning, numbers were just released with unemployment numbers. Unemployment is steady. It actually came in below expectations. Extended benefits actually came in below expectations. So overall, we're seeing some steadiness, even with these headlines of some large layoffs with certain companies. It's telling us there's still a very, very tight job market. A lot of changes, a lot of structural changes going on in the economy that I have talked to in different presentations throughout the industry. So, I think it's really important to take a look at the numbers, not make large assumptions, and to try to analyze what is really happening as we go through some massive structural changes in businesses, whether it's automation, whether it's AI and where that investment is happening.
We are in a very unique time in the fourth industrial revolution and with that, there's going to be some changes on what these metrics mean. Overall, looking underneath the hood, a lot of headwinds, but overall, the economy is really doing pretty well. We are seeing an uptick in spending. Bank of America Institute in their latest reporting will tell you that people that are receiving a tax refund, they're spending that at a much higher clip than they did last year and I think we're seeing that reflected in our travel numbers and overall economy numbers, and that is one of the reasons the economy is healthy. Saw a report yesterday the overall average tax return is up 11%. That's 11% extra spending and or savings, but we're seeing a lot of spending.
And what I thought was very encouraging, and we're seeing this really play out in the hotel industry, is the lower income categories in those numbers are spending at a higher rate on discretionary spend, specifically travel and air. That is really encouraging for our industry, and I think that is why we are seeing some of this bifurcation dissipate, where we're no longer seeing this drop in economy, mid-scale, upper mid-scale, and then that luxury segment. We're starting to see that actually start to spread out. That is very healthy for our industry. It's a good sign.
Again, at the end of first quarter, I would just call it steady. With all the headwinds we have, I am actually very pleased on where we are. I'm encouraged that hopefully we will get some of these issues resolved, the funding around the government that we need to get resolved, issues around the globe we need to get resolved. If we can settle and come to a peace deal with Iran, you will see oil prices come down quickly, which will impact not only jet fuel and air pricing, but overall, the only inflationary numbers we are seeing in the economy.
Our inflation numbers did tick up in March, but it is all economy driven, and there were some real positives in there that I would point out is that many food and beverage items actually went into the negative as far as inflation. So, we have food coming down, but it's kind of hidden in the overall number because of this large influx of oil pricing. But if you look at the core pricing inflation—that's why we measure both, but core versus overall—overall includes energy and food. When you bring in just core, core is stable. So that's telling us with that noise, if we can get things settled, specifically in the oil markets, we should be setting ourselves up to run very well for the rest of the year.
Corporate earnings so far have been pretty positive. We've seen strength in corporate earnings. None of that has changed. We're about to see first quarter earnings, so we'll see what that looks like. But overall, we're seeing some stabilization in the overall economy, which gives me a lot of encouragement for the rest of the year. We'll hold on tight. We'll hope that these issues get resolved and it would be nice to have more tailwinds than headwinds and hopefully we'll see that getting into the second quarter.