Taylor Swift IS the Economy
including a Taylor Swift shoutout from the Federal Reserve Bank of Philadelphia
She Is The President
Taylor Swift is a force to be reckoned with. She is her own economy. The Era’s tour, at its current pace, is on track to generate an additional $5 billion in economic impact. Those are $5 billion of economic activity that simply did not exist before the superstar decided to hop on the road — greater than the gross domestic product of 50 countries! In a sense, the Era’s tour is its own sort of economic stimulus.
Much like the government’s fiscal policy and (occasionally) the Federal Reserve’s monetary policy, the Era’s tour is injecting several billion dollars into the economy. This calls for job creation, labor demand, wage increases, innovation, etc. Taylor Swift is the president, and Taylor Swift sets her own policies.
The concert was EXPENSIVE. After surveying 596 people who attended, QuestionPro found that the average concert goer spent ~$1,300 on the entire experience. This includes concert tickets, flight, hotel rooms, food, drinks, etc. While a sample size of 596 surveys pales in comparison to the average 54,000 people in attendance at each concert, it certainly shows the ferocity with which people spent their money.
But the audience did not anticipate spending such a large chunk of cash (or credit). The average budget for attendees was around $600, meaning they spent an average of $700 more than was anticipated! Despite the gross underestimation, 70% of those surveyed said it was well worth it, and 90% said they would attend attend another Taylor Swift concert, even if it cost the same, a whopping $1,300.
Local Economies
This budget increase acts as massive stimulus to local economies!
Chicago saw an all time record for total hotel rooms occupied — 44,000 hotel rooms occupied each night, leading to $39 Million in hotel revenue.
The Taste of Belgium restaurant in Cincinnati saw its best two days of sales since it first opened, serving up drinks like “Lavender Haze” and “Cruel Summer”.
The Country Music Hall of Fame and Museum in Nashville had an all time record month in its entire history of 65 years — 114,000 visitors!
Redd’s Restaurant in New Jersey offers a shuttle service to the MetLife stadium, and 50x increase in revenue compared to a typical holiday weekend.
These are all meaningful pieces of stimulus! My favorite example comes as a direct quote from the Federal Reserve Bank of Philadelphia:
“Despite the slowing recovery in tourism in the region overall, one contact highlighted that May was the strongest month for hotel revenue in Philadelphia since the onset of the pandemic, in large part due to an influx of guests for the Taylor Swift concerts in the city.”
Imagine getting a shoutout from a Federal Reserve Branch because of the prosperous economic activity you’re singlehandedly causing… Wild.
So much economic activity, in fact, that in this general sentiment can reestablish inflationary worries. The Chairman of the Federal Reserve Jerome Powell was even asked:
We've seen the "Barbie" movie numbers. We've seen everyone going to Taylor Swift concerts this summer. It seems like the American consumer is in pretty good shape. And it does seem like growth is sort of picking back up… If we see growth not just stabilizing but performing well this summer, is that a problem because it's inflationary? Or is it good news because it suggests that a soft landing is more likely?
And his response was effectively that we’ve seen very meaningful disinflation, while keeping a strong labor market, and holding up resilient consumers — all in a rising rate environment. And that’s a good thing! Consumer confidence is also on the rise, so people are starting to feel better. He did add, however, that “stronger growth could lead over time to higher inflation,” saying that they’ll be watching this activity carefully to see if it warrants any policy response (i.e further rate hikes).
Wages
While it’s a ton of money to spend on a single concert, it could be signaling a return of wage strength. We’ve seen wage growth of the bottom 10th percentile of earners be quite strong the past couple years, where real hourly wage has grown about 9%! (According to this study from the Economic Policy Institute). With inflation coming down, real wages are finally turning a positive corner.
Debt
The worry, of course, is that people are digging themselves into credit card debt to finance all the concert activity. Americans now owe a record one trillion dollars in credit card debt, in an increasing interest rate environment.
To make matters worse, we have the end of student loan forbearance coming in hot. Student loan payments will resume, with the average debt holder having to pay several hundred dollars per month. An event that will certainly be demoralizing and harmful to the average consumer.
It’s important to have economic stimulus, especially in local communities, restaurants, businesses — it gives some power to the people. What Taylor Swift did was a remarkable feat. It does, however, come at the cost of depicting a glaring wealth gap. Some people can afford to spend $1,300 on a Taylor Swift experience, some people can’t. Amidst a housing crisis, the return of student loan payments, aggressive inflation the last three years — it doesn’t feel great to know the outpour of money poured into one show.
Policies
With that being said, Taylor Swift has been exceptionally giving throughout her tour. This is part of her policy, if you will. You stimulate the economy — and one of the key ways of doing that is by helping the workers. She reportedly gave out $100,000 bonuses to each of the 50 truck drivers on her tour. She made immense contributions to food banks across each of her tour stops. There have been multiple articles of food banks in Seattle, Detroit, Santa Clara, Arizona, and more thanking Taylor Swift for the generous donations, generous enough to feed up to 500,000 people per month at certain individual food banks.
The Era’s tour has smashed records, it’s well on track to be the highest grossing tour in history. In its wake, we can see the impact that fiscal stimulus can have on local economies, leaving them more prosperous than they were initially. This, in a sense, illustrates what it is the government often tries to do with its own fiscal policy. I think this Era’s tour has been a cool proxy for that, albeit on a much smaller scale, and I think Taylor Swift is unstoppable.