The economy is slowing. Rising interest rates and stubbornly high inflation are squeezing indebted households. And just about every forecast is warning that a recession is looming.
But there is one bright spot — one place where the flashing red lights are shrugged off by an army of consumers perfectly content to spend generously: Taylor Swift’s Eras Tour.
“Taylor Swift is a real representative, along with the Eras Tour, of the huge consumer spending power that still exists out there,” economist Brett House said.
The professor of professional practice in economics at Columbia Business School in New York, who was previously deputy chief economist at Scotiabank, said that during the COVID-19 pandemic, consumers renovated their homes, spruced up their backyards and gobbled up electronic gadgets. Now, he says, what they crave are experiences.
“I’d say this isn’t just about Taylor Swift. This is about the importance of place and being together after a period when we couldn’t do so.”
House and his cousin were able to get coveted floor seats to 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’s meaningful to hear music and be in one place for that experience,” House said. “And people are willing to invest in it.”
Swift tour forecast to have $5B impact
And investing they are.
Cassie Leonhardt travelled from her home in Vancouver to Arizona for the opening night of the tour. She spent $980 on a flight, her hotel cost $590, and her ticket ran her another $550.
She also bought tickets to Swift’s Seattle concert, which cost $1,150. She had her eye on more expensive tickets closer to the front, but she just didn’t have the cash.
“If I had the capital do it, I probably would drop $6,000,” Leonhardt told CBC News. “To have a front-row ticket, it’s worth it 100 per cent for me.”
All that spending adds up.
And it’s not just the stadium, the promoter or even the artist that are cashing in. Leonhardt says she saw crowds of fellow Swifties at the airport and in the hotel lobby looking for local transportation and a place to eat.
The online research group QuestionPro crunched the numbers and found the Eras Tour will generate billions of dollars in economic activity in the United States.
“If the current spending pace continues through the end of the tour, the Eras Tour will have generated an estimated $5 billion [US] in economic impact, more than the gross domestic product of 50 countries,” QuestionPro wrote in a news release.
As the tour swept through Las Vegas and Chicago, boards of trade in both cities heralded the economic impact on the hotel industry.
Occupancy rates in Chicago reached 96.8 per cent when Swift played three shows this month. A two-night run through Las Vegas helped push tourism numbers in that city to levels not seen since the pandemic.
Consumers spend as economy slows
That resilience in consumer spending is good for local businesses. But it worries policy-makers.
Central banks around the world have been aggressively hiking interest rates over the past year with the express purpose of slowing spending.
The theory is that as borrowing costs rise, consumers would be less likely to spend on something as decidedly discretionary as concert tickets.
But policy-makers have been consistently surprised by consumers’ willingness to spend even as disposable incomes fall and the economy slows.
“Despite all this, we’ve been surprised about the people [who] are going out and buying still a lot of things,” Bank of Canada deputy governor Paul Beaudry said in a speech on June 8, the day after the central bank hiked its benchmark interest rate again. “The surprising part is actually that strength among the consumers.”
That consumer strength is on permanent display as all those Swifties flock to city after city, bidding up the cost of tickets, hotel rooms and everything else along the way.
Some say Swift and other big acts, like Beyoncé’s Renaissance World Tour, are actively feeding into the inflation problem that central bankers are trying to fix.
But economists have long debated whether one-off events like this or major sports matches influence inflation in the same way that broad-based price increases do.
Manulife Investment Management chief economist Frances Donald, a noted Swift fan, says the biggest factor here is that the singer has tapped into a moment that is fleeting.
“Taylor Swift has perfectly timed her concerts to a period where peak consumer spending and peak employment rates are really a substantial qualifier of our current economy. Six months from now, we likely aren’t going to see tours of this magnitude,” Donald said.
The Bank of Canada’s decision to raise its key interest rate to its highest level in 22 years sent a clear message: the economy is still too hot. It’s led some experts to wonder if a recession is needed to cool down the economy. Lauren Bird speaks to CBC’s Peter Armstrong about what to expect.
Timing is everything
That keen sense of timing isn’t just a fluke. Swift has carved out a reputation as a smart and canny business manager.
When the rights to her earlier recordings were sold, she promptly began re-recording her albums so she would own exclusive rights over the music and publishing.
Swift and her fans took on Ticketmaster and ticket resellers over so-called junk fees. This week, Live Nation (which owns Ticketmaster) agreed to a more transparent process of billing customers.
“She has been a very savvy businessperson,” economist Brett House said.
He says while much of the success of the Eras Tour can be chalked up to timing, there’s more at play here than just that.
“I don’t think we should discount how much of this is a real tip of the cap to Taylor Swift for being a very effective businessperson,” he said.
Meanwhile, the economy is already showing signs of weakness. Even the kinds of consumer spending that marked the beginning of the Eras Tour is beginning to slow.
When she bought her tickets, Cassie Leonhardt was confident about her finances and her place in the economy. Now she says she’s glad she got her tickets before things slowed too much.
“I don’t regret it,” she said. “But at the same time, I think, in hindsight, knowing where we’re at economically now, I might have just maybe opted for 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 — a moment they see as priceless.
