You Need to Calm Down: Why Taylor Swift’s Economy Isn’t Real

By Balazs Koranyi for Reuters

Taylor Swift is taking Europe by storm, prompting some experts to predict a windfall as fans flock to dozens of sold-out concerts from Dublin to Vienna and beyond.

The hope is that Swift, along with the Olympic Games in France and the Euro 2024 European Football Championship in Germany, will provide a shot in the arm for a continent that has been riding out a recession for most of the past two years and lagging far behind the United States.

But there’s one problem: “Swiftonomics” isn’t actually true.

He may be a megastar who will revolutionize the music industry, but once the excitement subsides, you’ll need a magnifying glass to see the economic benefits.

Let’s take Stockholm as an example. Nearly 180,000 fans attended her three concerts in May, half of them from abroad, which generated nearly NZ$131.6 million in turnover for the city.

That’s an impressive three-day achievement for Stockholm, but a drop in the ocean even for Sweden’s mid-sized economy, which ranks eighth in the European Union with annual output of NZ$1 trillion.

“This extra turnover is a huge weekend boost for Stockholm and especially for the tourism sector,” says Carl Bergkvist, chief economist at the Stockholm Chamber of Commerce.

“But it’s simply a weekend that has no visible or significant impact on overall economic growth.”

The Chamber estimates that hotels and restaurants made a fortune, and sales of cowboy hats increased by 155 percent.

The impact on prices is similarly invisible and may be even smaller than when Beyoncé performed in the city a year earlier, triggering a temporary inflation panic. Whether Beyoncé had an influence or not, inflation in Sweden dropped from 10 percent to just over 2 percent.

“Is there a Taylor Swift effect? ​​It’s incredibly small and temporary, at best,” said Carsten Brzeski, an economist at ING.

“There are numerous studies done in the run-up to big events showing the economic benefits, but after the fact, you need a magnifying glass to put these so-called benefits into numbers,” Brzeski said.

The verdict is the same for the Olympic Games and Euro 2024.

They are beneficial to restaurants, beer retailers and gadget sellers, but they have no lasting impact on consumption patterns.

“The consumption spending that does occur is spending that would have occurred anyway and tends to be a form of substitution,” explains Professor Simon Shibli from Sheffield Hallam University.

The argument is that the money spent on a concert ticket or hotel would come from the family budget, meaning there would be less left for other expenses, such as restaurants or travel.

Danske Bank’s tongue-in-cheek “draught beer index” showed huge gains when Denmark played in the recent European Championships – peaking with pub and restaurant revenues increasing by 106 per cent compared with usual results.

“On a micro level, such events do provide a boost, but even that is small and temporary,” said Danske’s Piet Haines Christiansen. “They are important for specific sectors, such as hotels and catering, wherever Taylor Swift appears, or beer sales in countries where football is played.”

Last month, some local media picked up on Barclays research into Swifties’ shopping habits, suggesting that her concerts would contribute £1 billion to the British economy.

But beyond the likely substitution effect they have on other expenses, there is also the fact that a significant portion of Swift’s tour proceeds will go to the United States, offsetting the already small local economic benefits.

For economies the size of the UK or continental Europe, such transfers would have no impact on the trade balance: in April alone, the 20 eurozone countries had an export over import balance of no less than NZ$68.5 billion.

– Reuters