Farewell, America?

Aussies love the United States.

Ezekiel
Sure, go on and eat that atheistic All Bran. Enjoy being regular in HELL.

I’ve been three times in the last four years. And I’m not alone.

Screen Shot 2014-01-28 at 11.00.59 am

Part of the attraction is flights that are suddenly very very cheap. When the Qantas/United duopoly on the Sydney-LA route was broken in 2008, the price of flights halved.

home of the brave
Life, Liberty and the Pursuit of Horned Things.

When V Australia entered the market in 2008, their killer price offering was $1899, 16 percent below the existing lowest price. I’ve since seen return flights below $1000.

You can still buy a flight Sydney-LA for just a little over $1300 if you are bold and foolish enough to trust your travel to United. [My last trip to the States involved an unscheduled night in Sydney when someone crashed a luggage cart into our United Jet. Their initial compensation offer was accommodation in Woolongong and a flight 3 days later…]

California is... different
California is… different

At $1300, the appeal of a trip to the US is strong. The politics may be stuffed, but much like China, that doesn’t ruin it as a place to visit. I have been there more than any other country, without feeling like I’m running out of towns or states I want to go to.

mericuh
Where freedom is just a bail bond away!

But, sadly, the best time to visit America is now past. The weird period in global financial markets is over, and US quantitative easing is heading (slowly) for the exit. Our dollar might be lucky enough to get back over US90c, but the word parity can now safely be taken by currency writers and put in the top cupboard, along with “gold standard” and “the great moderation“.

Late last week, the Aussie dollar dipped to a its lowest level since 2010: US86.5c.

Screen Shot 2014-01-28 at 11.39.58 am

 

The effect of the falling Aussie dollar is already showing up in the ABS inflation statistics. There is likely to be a lag too, so that might not be the end of it.

Screen Shot 2014-01-28 at 11.45.21 am

 

So, it’s farewell America.

America, the wind beneath my wings
You were the wind beneath my wings. *sniff*

So what are our alternatives?

New Zealand is also going to feel more expensive than it has in years.

Screen Shot 2014-01-28 at 11.56.22 am
AUD v NZD

 Europe is just as bad.

Screen Shot 2014-01-28 at 11.59.02 am
AUD v EUR

But luckily, the second-top holiday destination for Australians has  a currency that’s even less popular than ours. In November 2013, Indonesia pipped the US as our second-top travel destination. I predict that by November 2014, there will be daylight between them.

Screen Shot 2014-01-28 at 12.03.33 pm
AUD v IDR

Or, I suppose, if things got desperate, you could always take a holiday in the place where the exchange rate is always 1:1.

sydneyI hear it can be quite nice.

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thomasthethinkengine

Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

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