(NEXSTAR) — As Americans continue to deal with inflation in their daily lives, a new term associated with higher costs and lower revenues is irritating many business owners. The new term is called “fanflation”, but what exactly does it mean?
“Fanflation” is a word economists use to describe a current trend that goes against traditional consumer behavior during inflation. Historically, consumers have tended to cut back on spending overall and spend only on essentials, such as replacing a washing machine or buying a new car. However, as the New York Times explains, consumers chose to continue spending money on “entertainment.” experience (not products) until summer 2023
After years of shutdowns or limited activities due to COVID-19, many economists and bankers say data shows people are spending money on experiences they might have missed out on during quarantine or illness.
This is one of the reasons why the live entertainment industry is currently booming, especially the stadium tours of music superstars Taylor Swift and Beyoncé. Over the course of Swift’s career, the Eras Tour generated approximately $5 billion in consumer spending (including guest travel, merchandise, food, etc.), according to research firm QuestionPro. Overall, concertgoers told the firm they spent about $1,300. for visibility. Meanwhile, Beyoncé’s show grossed an estimated $4.5 billion – in addition to being the highest-grossing tour by a female artist ever.
In addition to the “Era” and “Renaissance” tours, the cinematic anomaly known as “Barbenheimer” is considered a major economic boost this summer. Morgan Stanley estimates these developments contributed to “0.70% third-quarter consumption growth” in the US. all economics, not just entertainment.
However, the impact of these major spectacles is not felt across all industries.
Last week, Best Buy CEO Corey Barry blamed “fanflation” and Taylor Swift for lagging sales of electronics such as TVs and audio systems.
“Fanflation, Taylor Swift… people are really willing to pay for that experience,” Barry said at Fortune’s Most Powerful Women summit. “The bigger products in electronics aren’t what people are interested in right now.”
But the fun is expected to be short-lived, at least not by all economists.
In his September Portfolio Thoughts letter, Morgan Stanley senior director of portfolio management David Glickstein wrote that Morgan Stanley expects “more muted GDP growth” through the end of 2023.
“This is partly due to resurgence in student loan debt, while they (Morgan Stanley) also expect to see a rebound in consumer spending after a summer of spending on Barbenheimer and Taylor Swift/Beyoncé tours.”
Even though there will be fewer “fanflation” events on the horizon, Glickstein says the likelihood of a recession has “reduced markedly.”
Meanwhile, the Eras Tour is breaking even more records, with its October concert film earning $95-$97 million in its opening weekend, becoming the highest-grossing US concert film ever. Beyoncé’s concert film “Renaissance: The Beyoncé Film” hits theaters on December 1st.