Taylor Swift’s (Not So) Cruel Summer Savings
The Taylor Swift era
Let’s face it. It’s Taylor Swift’s economy. The rest of us are working on it.
The reigning American music monarch announced this week that a film version of her record Eras Concert Tour would be released in October in AMC theaters. AMC shares jumped on the news. On Friday, the stock price was up 9 percent. (However, they are still down more than 60% since the start of the year.)
Last December, Billboard Estimates Eras Tour Would Make $590 Million in ticket sales for all 52 announced tour dates. This would have made it the fourth highest-grossing tour, according to Billboard estimates. However, this is somewhat misleading as the tours that preceded it spanned years, including U2’s $736 million tour from 2009 to 2011 and Ed Sheeran’s $736 million tour from 2017 to 2019.
The most profitable tour so far is “Farewell to the Yellow Brick Road” by Elton John tour. It grossed $776 million, according to Billboard. But it’s been going on since 2018 (with a pandemic hiatus from 2020 to 2021) and could continue until Sir Elton actually reaches the end of the road.
(Note: These are all nominal numbers. In inflation-adjusted terms, it’s likely that the bestseller list would be quite different and include many older acts.)
Taylor Swift performs onstage during “Taylor Swift | The Eras Tour” at Paycor Stadium on June 30, 2023, in Cincinnati, Ohio. (Taylor Hill/TAS23/Getty Images)
Since Eras’ initial estimate by Billboard, Swift’s tour nearly doubled in size. Billboard estimates that its revenue should reach around $1 billion. Some analysts think that figure could be even higher, up to $1.4 billion.
Even that understates what people spend to see Taylor Swift. The US face value of Eras Tour tickets ranges between $49 and $499. The average secondary market was $3,801 as of July 10, according to music site Pitchfork, which relied on data from analytics firm TicketIQ. Multiply that by the average of 54,000 fans attending each stop of his gig and you’re talking serious money.
Government data indicates that Americans are spending significantly more on live entertainment this summer than last summer. Personal consumption expenditure (PCE) data for July released this week showed that non-sports live entertainment spending increased 48.7 percent from a year ago, a jump from $28.3 billion to $42.1 billion.
Fans attend “Taylor Swift | The Eras Tour” at Empower Field At Mile High on July 14, 2023 in Denver, Colorado. (Tom Cooper/TAS23/Getty Images)
Before you roll your eyes and blame inflation, the data shows that price increases only play a small role. Compared to a year ago, prices for non-sports live shows rose 2.4%, according to the personal consumption expenditure price index. In other words, there was a real expansion of concert consumption in the Swift era.
The skinny on prescription drug sales
Americans are also spending significantly more on prescription drugs this summer than they did last summer.
This week’s publication on personal consumption expenditure showed that prescription drug spending increased by 9.8 percent in July compared to the same month a year earlier.
This is unlikely to be because people are in much worse health than a year ago. And it’s it is not true that inflation is responsible for most of the increase. The PCE prescription drug price index is up 2.8 percent. That’s a big increase, but not enough to explain why we’re spending so much over the counter.
It is very likely that the increase in expenditure is due to purchases of GLP-1 diabetes drugs that are increasingly being used for weight loss. In their earnings calls this summer, major retailers with pharmaceutical businesses, including Walmart, Kroger and Rite Aid, said increased demand for weight-loss drugs helped boost sales in the second quarter.
“We still expect food, consumables, and health and wellness, primarily due to the popularity of certain GLP-1 drugs, to increase as a total percentage in the second half,” said Walmart CEO Doug McMillon last month.
Matthew Schroeder, chief financial officer of Rite Aid, said his company’s increased pharmacy sales and improved full-year revenue forecast were “due to increased sales volume of Ozempic and other high value-added GLP-1s”.
A Goldilocks Employment Report
Between taking diet pills and going to concerts, Americans still found time to work more in August.
The average weekly duration has increased from 0.1 hour to 34.4 hours in August. Payrolls rose by a solid 187,000, which is near the high end of the estimate range and above the consensus of 170,000.
The unemployment rate climbed to 3.8 percent as more people entered the labor market looking for work. The labor force participation rate rose 0.2 percentage points to 62.8 percent, after remaining stable since March. And it’s no wonder. Those Taylor Swift tickets and those Ozempic pills won’t pay for themselves.
Wage growth was moderate at 0.2 percent for the month, a decrease compared to July. Compared to last year, the average hourly wage increased by 4.3 percent. This is still too high to be compatible with 2% inflation, but it is moving in the right direction.
What is important to remember from the jobs report is that it supports the thesis of a soft landing for the economy. This certainly puts no pressure on the Fed to raise rates.
From the Fed’s perspective, it’s “what you really, really want,” as one Wall Street analyst put it (echoing those pop icons of another era, the Spice Girls). Job creation is robust but slower, workers are re-entering the labor market, wage growth is slowing and yet unemployment is rare. Goldilocks soups happily.
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