Taylor Swift’s impact on the stock market? We are convinced.

Taylor Swift’s impact on the stock market?  We are convinced.

By Charles Bassey

‘Shake it out’: Strong consumer spending epitomized by the ‘Round for the Ages’ helped the US avoid a widely expected summer recession, landing Swift on the MarketWatch 50 list of the most influential people in markets

As a longtime fan of Taylor Swift, Cat Mahon always knew she’d be attending the artist’s long-awaited “Eras Tour” this year. But little did Mahon believe it would help move the American economy forward in the process.

This may seem like more than a slight exaggeration, but it is not entirely far from the truth. Mahone spent at least $10,000 on tickets, travel and concert merchandise as part of Swift’s residency, which took her to 11 concerts in the New York, Philadelphia and Los Angeles metro area.

It’s been a financial burden for the 25-year-old public relations professional who lives with her parents in New Jersey. “My friend said to me, ‘This is money you could have spent on an apartment,'” Mahon says.

It was an incredible experience that Mahon felt she couldn’t pass up, saying: “It was very emotionally fulfilling.”

This was a year marked by such a breakthrough, that Swift created a wave of hysteria that could be likened to the early days of Beatlemania. However, came a wave of tour-related spending from Mahone and countless other Swifties — about $5 billion in total, according to survey firm QuestionPro — that exceeded the hundreds of thousands of tickets sold for the 50-plus artist. American concerts.

Call it Taylor economics, as some have already done. Or Swiftonomics, if you prefer. Either way, she was a force to be reckoned with. It served as a proxy of sorts for consumer mindset in 2023.

Beyond SWIFT, Americans have continued to spend this year, despite early forecasts of doom and gloom for the economy as interest rates rise, and despite warnings from experts that the United States could slide into recession by the summer. But that did not happen, and the US stock market rebounded as a result.

Americans spent money on everything from trips to restaurant meals to designer handbags, a “revenge spending” trend that followed years of pandemic-related isolation and restrictions.

Things came to a head in July, when consumer spending, which accounts for more than two-thirds of the U.S. economy, jumped 0.9%, the largest increase in months, according to a Commerce Department report. In August, consumer spending increased another 0.4%.

It’s enough to raise an interesting question for MarketWatch: Have Taylor Swift and the revenge-spending consumer played a role, big or small, in the US stock market, as measured by the S&P 500 SPX, posting a strong total return of more than 10% so far in 2023? We think so and have named Swift to this year’s MarketWatch 50 list of the most influential people in the markets.

Of course, correlation should not imply causation – but still. The S&P 500 fell 7.8% from its first-quarter high to 3,858 on March 13, its lowest closing level in 2023, amid recession fears. Four days later, Swift launched her “Eras Tour” in Glendale, Arizona. By the time she arrived in Arlington, Texas, at the end of March, the S&P 500 was above 4,100, and continued to rise as her tour crossed America. At the final date of its 2023 US race at SoFi Stadium in Inglewood, California, on August 9, the S&P 500 closed at 4,468. Since the US tour was halted for the year, the S&P 500 has fallen to 4,238.

In fact, the market’s rise has paralleled Swift’s rise as a pop juggernaut. It’s easy to write off such timing as mere coincidence or coincidence. But some smart people in finance don’t quite say that. As for Swift herself, her team did not respond to an interview request for this story.

Certainly, the billions of dollars generated by SWIFT’s activity this year cannot be ignored, regardless of the fact that it is just a small fraction of the US GDP of $27 trillion. Over the summer, Swift even appeared in the Fed’s Beige Book, which noted the impact her concert tour had on travel and tourism spending in Philadelphia.

Swift has also had a direct impact on some publicly traded companies. Movie and theater chain AMC Entertainment Holdings (AMC) stock has been rising for several days in the run-up to the October release of the “Eras Tour” concert film. Swift’s picture had a global opening weekend of $128 million, setting a record for a concert film. Shoe retailer Shoe Carnival (SCVL) said it saw “an uptick in Western items” associated with “the whole Taylor Swift concert” (apparently, Swift loves her shoes and so do her fans).

“It’s certainly a market driver, but I think there’s been a perfect storm that has allowed it to be a market driver,” says Thomas LaSalvia, chief economist at Moody’s Analytics. He cites the fact that the US economy “held up much better” than expected and that consumers “were ready to get out and experience life like never before.”

This brings us to those Swifties who traveled across the country to attend shows and booked flights and hotels in the process. Swift-related money spent on room nights alone totaled $208 million, according to STR, a hospitality and analytics company.

Swift has released two albums this year: “Speak Now (Taylor Version)” in July and “1989 (Taylor Version)” recently. Both are re-recordings of previous albums created as part of Swift’s business-savvy effort to fully own her material.

Even Swift’s recent appearance at Kansas City Chiefs games — which has been linked to Travis Kelce — has led to a spike in seat sales on the secondary market, not to mention broader NFL boosts. Keep in mind that Swift does not sing the national anthem or provide the halftime entertainment at these games. She’s just there to support Kelsey.

Swift’s economic story extends to small entrepreneurs who have no obvious connection to the pop star.

“What I think is interesting is the pervasive effect on all these mom-and-pops that no one is talking about,” says David Schulhoff, the veteran music industry executive behind MUSQ MUSQ, an exchange-traded fund focused on music industry trends. In the field of music.

“People will spend amazing money on a feeling worth feeling.”

Nicolette Stessen ran a craft store in the Seattle area for 35 years, achieving modest success along the way — until Swift came into her life.

When the singer brought his “Eras Tour” to town last July, Stessen saw a 50% spike in business. the reason? Stessin’s shop, called Beadworld, specializes in exactly that: beads for jewelry making. Swift’s legion of fans often wear “friendship bracelets” that carry Swift-related messages and serve as a calling card for fellow Swifties.

These fans came by the hundreds to Beadworld, looking for goods to design their own bracelets. Even months after the Seattle dates, Stessen says sales at her 3,000-square-foot store are still up as fans seem determined to keep the tour happy.

“Some of them had so much fun they were making bracelets for the first day of school,” Stessen says, looking puzzled and amazed by her recent boom.

This is especially true given the fact that Stessin paid little attention to Swift’s music. “I love jazz and R&B,” she says.

Then there’s Poppy + Rose, a breakfast and lunch restaurant in Los Angeles that posted a $5,000 boost in sales on top of its $30,000 weekly average when Swift was in town for her summer concerts.

That’s enough money to help the establishment purchase the new iPads from Apple (AAPL) that it has long needed to run its operations, says Amanda Gomez-Feob, the restaurant’s general manager.

“Obviously $5,000 a week is an incredible amount” for such a small business, she says of the boost.

Swift also features prominently in another spending trend for 2023: the “Hot Girl Summer” movement that has included everything from the “Barbie” movie, which has grossed more than $1.4 billion worldwide so far at the box office, to the “Renaissance” tour Beyoncé’s trend. .

In short, these events were highly attractive to women and demonstrated their purchasing power as a result. By one estimate, 80% of the audience at Swift’s show in Texas was female.

The movement led by Barbie, Beyoncé and Swift is creating its own perfect storm, says Ellen Briggs, a brand analyst at decision intelligence firm Morning Consult. She stresses that this will have lasting consequences.

This “brought women’s spending to the forefront,” says Briggs.

This does not mean that all financial minds agree that Swiftonomics is a real thing. Or at least the thing that shaped the American economy — and thus the stock market — in any meaningful or lasting way.

“The market doesn’t respond to pop stars,” says Jeffrey Campbell, an economics professor at the University of Notre Dame.

Choose your argument. Some say the money spent on all things Swift was money that could have otherwise been spent on something else – say, a Disney (DIS) vacation or a Caribbean cruise – so there was no real gain for the economy. .

Others say SWIFT spending so far this year — and many other discretionary events, emotions and endeavors — will haunt the economy in the fourth quarter. This means that someone who made the trip to see Swift in Los Angeles could cut back on holiday shopping — or shopping in general.

Holly Gleskey, a 33-year-old Swift fan who spent more than $3,000 on a trip to California from her home in Detroit to see Swift perform, admits she will cut back on her spending this fall as a result.

“For the rest of the year, I’m more conscious of what I’m spending on,” she says.

Economists have pointed to the possibility of a cooling-off – and there is still talk of a possible recession. It’s more than just Swift-related factors, of course. For example, resuming student loan repayments may further impact spending.

(More to follow) Dow Jones News Agency

04-23-11 1319 EDT

Copyright (c) 2023 Dow Jones & Company, Inc.

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