Will Taylor Swift save the economy?
The economy is slowing down. Rising interest rates and stubbornly high inflation put pressure on indebted households. And just about every forecast warns that a recession is coming.
But there’s one bright spot—one place where the flashing red lights are brushed off by an army of consumers who are perfectly content with spending lavishly: Taylor Swift’s Eras Tour.
“Taylor Swift is a true representative, along with the Eras Tour, of the tremendous consumer buying power that still exists,” economist Brett House said.
The professor of economics at New York’s Columbia Business School, who previously served as deputy chief economist at Scotiabank, said consumers were renovating their homes, sprucing up their backyards and gobbling up electronic gadgets during the COVID-19 pandemic. Now, he says, they crave experiences.
“I would say this isn’t just about Taylor Swift. This is about the importance of place and being together after a period where we couldn’t.”
House and his niece were able to secure coveted floor seats for Swift’s recent concert in Detroit. He saw with his own eyes how the performer has tapped into a cultural moment.
“People want to be together. It makes sense to hear music and be in one place for that experience,” said House. “And people are willing to invest in it.”
Rapid tour is expected to have an impact of $5 billion
And investing they are.
Cassie Leonhardt traveled from her home in Vancouver to Arizona for the tour’s opening night. She spent $980 on a flight, her hotel cost $590, and her ticket cost her another $550.
She also bought tickets to Swift’s concert in Seattle, which cost $1,150. She had her eye on more expensive tickets closer to the front, but she just didn’t have the money.
“If I had the capital to do it, I would probably drop $6,000,” Leonhardt told CBC News. “Having a front row ticket is 100 percent worth it to me.”
All those expenses add up.
And it’s not just the stadium, the promoter or even the artist who make money. Leonhardt says she saw crowds of fellow Swifties at the airport and hotel lobby looking for local transportation and a place to eat.
The online research group QuestionPro crunched the numbers and found that the Eras Tour will generate billions of dollars in economic activity in the United States.
“If the current pace of spending continues until the end of the tour, the Eras Tour will have raised an estimated $5 billion [US] in economic impact, exceeding the gross domestic product of 50 countries,” QuestionPro wrote in a press release.
As the tour moved through Las Vegas and Chicago, trade boards in both cities announced the economic impact on the hotel industry.
Chicago occupancy reached 96.8 percent when Swift played three shows this month. A two-night run across Las Vegas helped lift tourism in that city to a level not seen since the pandemic.
Consumers spend as the economy slows
This resilience in consumer spending is good for local entrepreneurs. But it worries policymakers.
Central banks around the world have been aggressively raising interest rates over the past year with the express aim of slowing spending.
The theory is that as borrowing costs rise, consumers are less likely to spend something as decidedly discretionary as concert tickets.
But policymakers have been surprised again and again by consumers’ willingness to spend, even as disposable income falls and the economy slows.
“Despite all this, we are surprised by the people [who] are going out and still buying a lot of stuff,” Bank of Canada deputy governor Paul Beaudry said in a speech on June 8, the day after the central bank raised its benchmark rate again. consumers.”
That consumer power is on permanent display as all those Swifties flock to the city city after city, bidding up the cost of tickets, hotel rooms and everything else along the way.
Some say that Swift and other big acts, such as Beyoncé’s Renaissance World Tour, are actively contributing to the inflation problem that central bankers are trying to solve.
But economists have long debated whether one-time events like this or major sporting events affect inflation in the same way as broad price increases.
Manulife Investment Management chief economist Frances Donald, a noted Swift fan, says the key factor here is that the singer has tapped into a fleeting moment.
“Taylor Swift has timed her concerts perfectly for a period where spikes in consumer spending and peak employment rates are really a substantial qualifier of our current economy. Six months from now, we probably won’t see tours of this magnitude,” said Donald. .
The Bank of Canada’s decision to raise its key interest rate to its highest level in 22 years sent a clear signal: the economy is still too hot. It has led some experts to question whether a recession is necessary to cool the economy. Lauren Bird talks to CBC’s Peter Armstrong about what to expect.
Time is everything
That keen sense of timing isn’t just a fluke. Swift has earned a reputation as a smart and shrewd business manager.
When the rights to her previous recordings were sold, she promptly began re-recording her albums so that she would own the exclusive rights to the music and publishing.
Swift and her fans took on Ticketmaster and ticket sellers over so-called junk fees. This week, Live Nation (owner of Ticketmaster) agreed to a more transparent billing process to customers.
“She’s been a very shrewd businesswoman,” said economist Brett House.
He says that while much of the Eras Tour’s success is down to timing, there’s more to it than that.
“I don’t think we should underestimate how much of this is a real tip for Taylor Swift because he’s a very effective businessman,” he said.
Meanwhile, the economy is already showing signs of weakness. Even the types of consumer spending that marked the beginning of the Eras Tour are starting to slow down.
When she bought her tickets, Cassie Leonhardt felt confident about her finances and her place in the economy. Now she says she’s glad she got her tickets before it delayed too much.
“I don’t regret it,” she said. “But at the same time, I think, in retrospect, knowing where we are now economically, I might have chosen one date. [instead of multiple shows].”
But for now, she and countless other fans are paying what they can to be a part of a moment – one they consider priceless.
