(London) Taylor Swift fans aren’t the only ones keeping a close eye on her tour dates Eras. An eminent European economist tracks his movements from stadium to stadium on the Old Continent.
Philip Lane, chief economist of the European Central Bank, had the pop star in mind as he was interviewed on stage at a conference on Monday. His interlocutor asked him about the risk that persistent inflation in the services sector would intensify, as a very busy summer approaches in Europe, with the Olympic Games in Paris and Euro 2024 in Germany.
“Well, that’s very interesting,” he replied. “You managed to say all that without mentioning Taylor Swift. »
Swifties and their dollars are sweeping Europe
Taylor Swift is touring Europe this summer, bringing in her wake hundreds of thousands of Swifties who spend on plane tickets, hotels, restaurants and friendship bracelets. On Friday, she gave the first of her eight concerts at Wembley Stadium in London: 700,000 people were expected in the British capital. Analysts and economists are wondering about the Taylor Swift factor.
PHOTO ANDRE DIAS NOBRE, AGENCE FRANCE-PRESSE ARCHIVES
A Swifty wearing sunglasses on which we can read the name of the American star, on May 24 at the Estádio da Luz stadium in Lisbon. Portugal’s inflation rate accelerated in May, partly because of the concert.
In the United States, economists are already measuring the economic impact ofEras. The tour could generate US$4.6 billion in North America alone, thanks to spending on tickets, merchandise and travel. Because consumers are flocking to concerts, meals, vacations and other recreational experiences that they had to postpone during the pandemic.
Central banks are right to examine the inflationary potential when a global superstar passes: in May, when Beyoncé launched her Renaissance World Tour in Stockholm, an economist attributed to the singer’s concert a peak in inflation coinciding with the mass arrival of spectators from far away.
Rates have started to fall in Europe as inflation has slowed significantly over the past year, suggesting a return to the target inflation rate of 2%. However, we note with concern that certain inflationary pressures remain: in the services sector, we have noted several times higher prices than expected in the hotel and catering industry.
Demand for hotel rooms and flights linked to the European tour could drive up prices, impacting each country’s inflation rate. Central bankers examine the slightest stirrings of the data, seeking to distinguish one-off effects from lasting effects. Any concerns that inflation may not slow as expected could delay the rate cut.
PHOTO SCOTT A GARFITT, ASSOCIATED PRESS
In August, when the tour Eras will return to London, one of the shows could coincide with the day when the national statistics agency measures prices.
“All these little details will weigh a lot,” says Lucas Krishan, a strategist at TD Securities in London. “It can muddy the waters for central banks before their decisions. »
In May, inflation accelerated in Portugal, partly due to a rise in hotel prices in Lisbon “resulting from a major cultural event”, the country’s statistics office said. Swift performed in Lisbon on May 24 and 25.
The Taylor Swift factor can be mitigated if economists forecast the effect of shows on inflation, thereby preventing the market from being surprised by the data. The European Central Bank said the return to 2% inflation would be “bumpy” and that the relatively strong tourist season was already factored into the forecast.
However, Mr. Krishan notes that Taylor’s concerts Swift in August, when the tour returns to London, could add to service inflation in Britain, as one of the shows could coincide with the day the national statistics agency measures prices. If hotel prices rise as they did during the singer’s Liverpool concert this month, services inflation could rise by 0.3 percentage points. If inflation data is higher than expected in August, that could encourage the Bank of England not to cut its rate in September, Krishan said.
Other analysts doubt that Taylor Swift can have a detectable impact in national statistics.
“It is unlikely that Taylor Swift will have an impact on central bank or government policy,” opines George Moran, economist at Nomura. “And I don’t think we can count on superstar performances as a factor in national growth. »
One billion pounds sterling
According to Barclays bank, the tour Eras will lead to an increase of almost 1 billion pounds (C$1.7 billion) in the British economy, but these estimates are difficult to substantiate, Mr Moran adds, because no one knows the extent to which people are simply spending their money differently . And even at £1 billion, the tour would not be enough to revitalize Britain’s stagnant economy.
Mr. Moran agrees that the tour could have a significant impact in certain cities and sectors. When tickets went on sale last summer, Airbnb reported an increase in searches of more than 300% on average in host cities. The Greater London Authority estimates that Taylor’s eight London concerts Swift will inject £300 million into the economy.
“The impact will be more local than macro,” believes Mr. Moran. “Taylor Swift is clearly a phenomenon, and her visits are creating a lot of action in every region’s hospitality industry. »
This article was published in the New York Times.
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