Spending on U.S. business travel would fall $20 billion over nine quarters if the U.S. economy goes over the “fiscal cliff,” according to a Global Business Travel Association report.
However, going over the cliff would benefit business travel in the long term, the GBTA said.
“The elimination of tax cuts and reductions in federal spending would lead to reduced deficits and lower interest rates over the long run, resulting in business travel spending and an overall economy that grows more quickly after absorbing the shock of the fiscal cliff,” the GBTA said.
The fiscal cliff is a combination of expiring tax cuts and automatic spending reductions by the federal government, which are due to take effect on Jan. 1 if left unchanged by Congress.
Falling over the fiscal cliff would send the economy into a recession, the GBTA said, resulting in the $20 billion spending decrease over nine quarters, a 2.5% decline.
If the U.S. government were to keep all tax cuts in place and reduce no government spending, business travel spending would rise $5.5 billion over the next nine quarters, the GBTA said. However, much of that growth would be attributable to inflation, the GBTA said.
The GBTA said increased government debt and continued deficit spending would eventually slow growth in business travel.
“This research shows that we must seriously consider both the near-term ramifications of the fiscal cliff and the long-term implications of expanding government debt,” said Michael McCormick, GBTA executive director.