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Swiftonomics: A blessing in disguise for a faltering economy
What is swiftonomics?
Here is what Investopedia says about Swiftonomics. “Swiftonomics refers to the economic influence of Taylor Swift and her impact on various sectors.” Who is Taylor Swift? She is an American singer cum songwriter, one of the world’s best-selling artists, with more than 200 million records sold worldwide. She is the second most-streamed artist on Spotify, the highest-grossing female touring singer, and the first billionaire with music as the main source of income. Seven of her albums have opened with over one million sales in a week.
The word Swiftonomics has become very popular and is at the top of Google search trends. This word has become more popular than Smithonomics, a term dedicated to Mr. Adam Smith, the founder of modern economics.
Let us do a deep dive and find the reality of Swiftonomics!!
What works for swiftonomics?
Her recent concert tour, famously named “Eras Tour” started on 17th March 2023 and will be on till 08th December 2024. She will perform in almost 152+ concerts over 20 months. This busy calendar means she has to perform in a concert every four days. The overall period includes her travel as well. So effectively, she will perform a concert every alternate day, continuously for more than one and a half years. Amazing spirit!!
As of writing this article, she has completed her first leg of the UK and Europe tour and will complete the final leg in London on 17th August 2024. (If you want the complete details of Taylor Swift’s Eras tour, you can find it here.)
But, we will speak more about the economics behind this concert rather than her spirit or stamina for performance. Can you guess the value of ticket sales in all these concerts? It has already crossed $ 1.0 billion and will be close to $1.5 Billion in ticket sales when her tour ends. This figure is only for the first-hand sales. The tickets that are re-sold at astronomical prices are not captured in the above figure.
Not only the ticket sales, the associated activities like people needing to fly from far areas, sometimes from neighboring countries, will create a demand for air tickets. Other associated industries like hotels for accommodation, restaurants, beer outlets, and outfit purchases will also see a boost.
How big the impact will be?
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Barclays’ research paper says the UK’s economy is likely to get around a $ 1 billion boost throughout a couple of months due to Swiftonomics alone. The paper estimates around 1.2 million fans will catch their idol in 15 shows during the summer holidays in the UK. As per their data analysis, Barclays saw a 15.8% year-on-year increase in consumers’ spending on entertainment.
Another evidence of Swiftonomics is the rough estimates about Swift’s recent tour to Stockholm city. The celebrity conducted three sold-out shows in the city, drew 180,000 fans to the concerts, and generated about $ 850 million Swedish crowns (equivalent to $ 81 million) of additional local turnover as per the estimates of the Stockholm Chamber of Commerce. Carl Bergkvist, the Chief Economist at the chamber, admitted that general economic activity in the city has increased, especially hotels and restaurants made a killing during the events, and even sales of a cowboy surged 155%.
Also, two major events, the Olympics 2024 (scheduled to be held in July 2024 in France) and the Euro soccer championship ( from mid-June to mid-July) underway, will add up to Swiftonomics and the economic activity in the UK and Europe will be higher till September quarter.
is swiftonomics a Reality or overhyped?
Let’s assume that the $ 1 Billion boost Barclay’s research expects the UK’s economy will get due to Swiftonomics is materialized. But is the number big enough? The size of the UK economy is in the order of $3.5 trillion, which means close to an average of $10 billion daily. The $ 1 Billion boost, spread over a couple of months, is minuscule compared to the size of the UK’s economy. It’s like a droplet in a bucket.
Secondly, let’s take the case of Stockholm example. The $ 81 million additional turnover is also minuscule compared to Stockholm’s average daily GDP (Gross Domestic Product).
Third, the economic boost is not a permanent one. It happened over a few days, and the impact will vanish in a few more days.
Fourth, and the most important point, the economic activity due to Swiftonomics is a substitution one. The fans spending money on event-related activities like ticket purchases, travel, and accommodation, would have to cut their spending on other activities like summer vacations, eating out, etc. The incremental economic activity due to Swiftonomics is insignificant.
Is BOE's decision to hold the interest rate linked to swiftonomics?
Many economists have reasoned that Swiftonomics for the Bank Of England did not cut the interest rate in its last meeting held on 20th June 2024. However, there was no official statement from Governor Andrew Bailey regarding the real reason for holding on to the existing interest rates. The inflation for May 2024 in the UK was 2% compared to 2.3% in April 2024. With the bank rate in the UK at 5.25%, the real interest rate works out to be 3.25%, which has been very high in the last few decades.
UK’s economy has been faltering in the recent past. The economy has just come out of the recession by increasing at a pace of 0.7% growth in the January to March quarter of 2024. Despite all these signals, the silence from the central bank is not a good sign. Any central bank has a moral obligation to be as transparent as possible to the larger economic audience. The financial market participants will understand what their central bank thinks about the economy, and as intermediaries, they will effectively carry the message to the end consumers. However, by keeping mum, it does no good for anyone.
Similarly, Europe has grown at a slow pace of 0.8% in 2023. This growth number does no good, considering the economic influence both the UK and Europe (their combined GDP is close to $ 23 Trillion, $19.35 trillion of Europe, and $ 3.5 Trillion of the UK) have on the financial world.
Therefore, if the BoE’s decision to hold on to the interest rate is purely for Swiftonomics, the Olympics, and the Euro Championship, then it’s not sound economics.
is there a subtle message from swiftonomics?
Yes. Even though Swiftonomics will not have a long-term impact on the economy, it has a subtle message for policymakers.
If a singer/musician/fashion icon can boost large economies like the UK and Europe without economic tools like interest rate cuts and quantitative easing, why not the policymakers with all the tools in their hand? It’s possible. They need to think outside of the box. The traditional methods of ultra-low interest rates and quantitative easing are not going to help every time.
Taylor Swift gave the boost due to increased activity in industries like music, hospitality, travel, tourism, and fashion. However, policymakers, both central banks and the political establishments, influence all the industries in a country. Out-of-the-box thinking in each of these industries will move the entire economy. For example, take the case of the green economy. Currently, overconsumption of fossil oil is causing pollution and therefore, creating an ecological imbalance. The cost of ecological imbalance through natural disasters is massive and can be saved through effective planning and implementation. A green economy will ensure a sustainable long-term good for the society.
This is just an example. Policymakers should look at many other industries and find solutions to move the economy.
So, even though Swiftonomics doesn’t give a permanent lift to the economy, the underlying message does give. It’s a blessing in disguise. It’s up to the people who matter and how they want to take it.
Let me know what you think.
Other Data Sources : Statista, Wikipedia, Investopedia
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Disclaimer: This article is the personal opinion of the author. The information in the article is generic and not tailored to specific situations of individuals. Therefore, the article is for informational purposes only and not intended to be personal financial advice or any kind of recommendation. Readers should understand that there is an inherent risk involved with financial decisions and should consult financial advisors for help with any investment advice. Neither the author nor Lifespectrum360.com is liable for the decisions readers make.
Birendra Sahu
Birendra is a seasoned finance professional with over two decades of expertise in the financial industry. He has experience in several multinational banks in both operations and technology. His areas of expertise are Investment Banking, Asset and Wealth Management, Treasury and Risk Management.
FAQ
Swiftonomics refers to the economic impact and influence that popular culture, particularly driven by figures like Taylor Swift, has on various sectors of the economy. It examines how events like her concerts, merchandise, and overall brand influence can stimulate economic activity.
aylor Swift impacts the economy through several channels:
- Concerts and Tours: Her concerts generate significant revenue for cities through ticket sales, tourism, hospitality, and local businesses.
- Merchandising: Sales of her albums, clothing lines, and other merchandise contribute to retail and online sales.
- Media and Streaming: Her music and media presence boost platforms like Spotify, Apple Music, and other streaming services.
- Brand Collaborations: Partnerships with brands lead to increased sales and brand visibility.
Yes, Swiftonomics can have a positive effect on a faltering economy by:
- Boosting Local Economies: When Taylor Swift’s concerts come to a city, local hotels, restaurants, and retail stores often see a surge in business.
- Job Creation: Events and tours require a large number of staff, from security to vendors, providing temporary employment opportunities.
- Increased Tax Revenue: The economic activities generated by such events lead to increased tax revenue for local governments.
- Reputation Stadium Tour (2018): Taylor Swift’s tour was one of the highest-grossing tours of the year, generating over $345 million and significantly benefiting the cities it visited.
- Eras Tour (2023): Her highly anticipated tour had a major economic impact on several cities, with reports of hotel bookings and local business revenues increasing dramatically.
The primary sectors that benefit from Swiftonomics include:
- Tourism and Hospitality: Hotels, restaurants, and local attractions see increased patronage.
- Retail: Local shops, especially those selling concert-related merchandise, experience higher sales.
- Transportation: Airlines, car rental services, and public transportation systems see a rise in demand.
- Media and Entertainment: Streaming platforms, radio stations, and media outlets benefit from increased viewership and listenership.
While the economic boost from events like Taylor Swift’s concerts can be significant, it is often temporary. However, the heightened exposure and influx of visitors can have long-term benefits for local economies by encouraging repeat tourism and increased investment in infrastructure.
Swiftonomics is unique in that it is driven by the cultural and entertainment sectors rather than traditional economic drivers like manufacturing or technology. While it may not provide long-term economic stability on its own, it serves as a valuable supplementary boost, especially for local economies.
2 thoughts on “Swiftonomics: A Blessing in Disguise for a Faltering Economy”
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