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This Time Really Was Different

The story so far: Despite an aggressive tightening campaign by the Federal Reserve, US consumption continues startlingly robust. That is the main reason why US growth has been stronger than forecast this year.

 Virtually everyone agrees that the explanation lies in the extraordinary stimulus payments paid out during the pandemic. That left consumers with money in their pockets, meaning that higher interest rates had less effect than they usually might.

While consumers had so much extra cash, consumption could continue. How much do they have left? Not much, the San Francisco Fed suggested.

I’ve taken the following numbers from a note by the Morgan Stanley economics team called “The Swift, Beyoncé, and Barbenheimer Effect.” 

During the third quarter, Swift’s “Eras” tour had 15 concerts, with average stadium capacity of 54,000 people. The average spend per attendee was $1,500, (Repeat: Each person paid $1500 to go to a concert, my emphasis added) including tickets, hotels, flights, food and other items. 

Beyoncé’s “Renaissance” tour has 34 concerts scheduled this quarter in stadiums with an average capacity of 70,000. Each of those attendees is expected to pay a total of $1,800 for the experience. 

In total, that’s $5.4 billion in extra spending during the quarter. The Barbie and Oppenheimer movies also brought more people to cinemas.

John Authers Bloomberg 8 September 2023


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