Funflation Economy: How Taylor Swift’s Eras tour has been impacting the economic activity in the US?

Bank of America has published a report titled as “Funflation in Full Force” where they delve deeper into the concept of ‘funflation’ and explain the economic impact of entertainment on the economy by analyzing Taylor Swift’s Eras tour. 

Taylor Swift’s Eras Tour has been making headlines over how it boosted the US economy by impacting the cash flow in the country. It is a bit tough to understand how this system works and how such economic assumptions are made. It is not a new phenomenon where we see fans spending excessively for entertainment. Bank of America has published a report titled as “Funflation in Full Force” where they delve deeper into the concept of ‘funflation,’ which can be described as a phenomenon where people increase their spending on live entertainment due to pent-up demand and higher savings following the Covid-19 pandemic. Tours of Taylor Swift and Beyonce can be a good example of this phenomenon. Such huge events can impact a number of businesses and bring cash flow in the market. According to the report, ‘funflation’ could result in a lasting shift in consumer behavior, ultimately benefiting the entertainment industry in the long term.

Bank of America analyst Jessica Reif Ehrlich, in her assessment of the live entertainment sector, emphasizes that it is currently thriving in the media and entertainment landscape. Ehrlich identifies five key factors contributing to the industry’s long-term growth:

1. A continuous shift in consumer spending towards services and experiences.

2. The ability to charge higher prices due to increased demand.

3. The positive influence of social media apps like TikTok in expanding fan bases and raising awareness.

4. The resilience of live events in the face of digital disruption.

5. The emergence of experiential marketing.

Taylor Swift’s Eras Tour

Ehrlich also predicts that talent, particularly artists with substantial fan followings, will extract more value from the ecosystem, primarily driven by increased supply and higher ticket pricing. Meanwhile, venues, with multiple independent revenue streams, are expected to capture the most value. According to a Bloomberg report, the combined impact of Swift and Beyonce tours may contribute an estimated $5.4 billion to the US gross domestic product.

The first name that comes to our head, thinking about the concept of funflation is Taylor Swift considering the huge impact her recent tour had. This stadium arena experience pays homage to every era of her 17-year career and has been underway since March 2023, set to run until November 2024. The tour is poised to become the largest tour in history, with an estimated $2.2 billion in North American ticket sales alone. Swift’s tour is not only setting music industry records but also boosting the economy and creating jobs in the cities it visits.

A report from survey provider QuestionPro estimates the total economic impact of Swift’s tour to be nearly $5 billion, encompassing ticket sales, travel, attire, food, and beverages. It suggests that each Eras show generates approximately $36 million in direct and indirect spending for the local economy, supporting more than 300 jobs per show. Additionally, Swift’s fans exhibit a willingness to travel long distances and spend generously on her concerts, with an average expenditure of $1,300 per person. Data from Bernstein reveals that the average revenue generated per room in US states during Swift’s visits surpasses the national benchmark by over 4 percentage points. These states experience an average increase of around 7% in revenue per room during the months of her visits compared to the same periods in the previous year, as reported by CNBC. Swift’s tour is also driving up the demand for streaming services, as fans revisit her older albums and songs after attending her shows. According to Spotify, Swift’s catalog witnessed an almost 80% spike in streams in the weeks following the tour’s commencement. Furthermore, Swift’s music has a positive spillover effect on other artists, as her fans discover new songs and genres through her curated playlists and collaborations.

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