The economy is about consumer spending not production: Confirmed by Swiftonomics.

Synopsis: The “economy” metrics focus only on consumer spending.

As confirmed by economic reporting on the Taylor Swift tour, the economy is measured by total consumption, and economic growth is purely an indicator of increased consumption.

Until very recently, I was under the misunderstanding that the economy was all about factors such as generating wealth for the average person and the viability of businesses and the efficiency of production of wealth and ensuring there is sufficient employment, but no, I now realise the metric of the economy is purely about consumer spending.

There is some logic as to why consumer spending could measure an economy, but “Swiftonomics”, and other examples also show why it can be at best a very misleading measure, and at its worse an outdated driver for producing economic growth through population growth which is not sustainable and results in protests against immigration and even xenophobia.

There are those for whom consumer spending as a metric works best, like for companies estimating the potential from entering new markets, and for providing growth for national and international businesses and for some taxes. As a metric consumer spending works best for those with the greatest wealth and those with tax style revenues, but for the average consumer, this means economic growth is unreliable as a metric of whether things are improving or not.

Yet since governments use this arguably flawed metric, it also means that governments can be motivated to take actions that can be sold as successfully delivering economic growth and successful, even if those actions result in negative outcomes for the average person and may be broken in the world of the 21st century.

There is probably no perfect measure for the economy that will work well for everyone, but for the average citizen it may be useful to consider whether things promoted as “good for the economy” are no longer working for that citizens own economic circumstances, and now only working for multinationals and top 1% or maybe 5% of those with greatest wealth.

The “Swiftonomics” confirmation: Consumer spending.

There is nothing specifically wrong with Taylor Swift concerts as opposed to other entertainment events, and the reason Taylor Swift is used as an example is purely due to the amount of attention the economics of her tour has been attracting at the time this is being written.

What can seem bizarre is that, as shown in the data below, Taylor Swift touring a foreign country like Australia, produces a boost to the local economy equal to the entire over half a billion dollars spent by concert goers, even though around one quarter of a billion dollars, or half the money that is boosting the Australian economy, is the profit made by Taylor Swift and thus will simply leave Australia.

How can all consumer spending help the economy?

Given that, from an economic standpoint, all consumer spending related to the Eras tour provides a boost to the local economy, then had Taylor Swift decided to perform for free in order to reduce ticket prices, this would, in the Australian economy example, have halved consumer spending that resulted from the tour and thus halved the benefit to the Australian economy. Really?

This also raises the question as to whether, had ticket prices in Australia been as high as the US$1,000 to US2,000 of ticket prices in the US, the Australian economy would have even seen a bigger boost?

Even though this can also be questioned, many people enthuse about how the spend in transport, accommodation, dining and extra tourists for other attractions can all boost the economy, but why does even the money paid to Taylor Swift also count as part of the lift to the local economy, rather than the economies where Taylor Swift will eventually spend that money, which assumedly will predominantly be in the USA?

The answer becomes clear from reading the wording of the economics focused news sources: every dollar spent becomes part of the economy. Regardless of any analysis of that spending.

Does the transport and hospitality spend boost prosperity or only the economy?

In the USA the 20 cities where the Eras tour USA concerts were held, all would have seen a real and enduring boost to their economy from increased consumer spending. A significant portion of the spending in those cities would have been spending by people who travelled to those cities to see the concert and brought their spending power with them.

But what about at the national level, as discussed in the data below? While it is possible more people from outside the US came to the US specifically for the concerts than the number of US citizens who went to concerts outside the US, this would not be a significant percentage, and the same would have applied for Australia: only a small minority of concert goers would be bringing their spending power from outside the country.

Yes, attending the concerts, particularly for those who do not live in the city where the concert is held, will result in spending on travel and hospitality, but attending the concerts do nothing to increase the spending power of those people. Given the people spending at the concert have no extra money to spend because of the concert, it seems most likely these people will have to reduce their other spending. Either they spend less over a period of time on hospitality services in the local area, or they reduce spending in other ways. For countries like Australia, where a large part of the expenditure became revenue for Taylor Swift, money might even overall be taken out of the economy.

Even if the concerts did result in long term spending with people either borrowing or lowering bank balances to enable overall increased spending, hospitality spending can often be simply circular, or more about wealth redistribution than wealth generation. Perhaps Taylor Swift fans represent a group with greater wealth than those working in hospitality, and those fans are just reducing their bank balances and helping achieve equality in society, and while that could be positive, it is not how the economics is described.

The Eras tour economics: the data.

According to Forbes, $4.6 billion boost to local economies for the 9 USA concerts alone:

According to Fortune, a data report from research company QuestionPro suggests that The Eras Tour has the potential to generate a staggering $4.6 billion in consumer spending in the United States alone. This figure is astounding and solidifies Swift’s venture as one of the most significant tours of all time, considering its overall impact on the economy.

Taylor Swift’s The Eras Tour Could Generate $4.6 Billion For Local [USA] Economies

Note the number quoted as “boost to the local economy” is the same number as “consumer spending”.

The same calculation is made the world over, with this from Australia:

“$900 of spending on tickets, accommodation, travel, merchandise and dining per person,” estimates Angel Zhong, an Associate Professor of Finance at RMIT University.

“The total injection directly into the Australian economy as a whole, is at least $558 million,” says Zhong. “The economic impact will likely extend beyond New South Wales and Victoria, positively affecting the entire country.”

$558 million and counting: Swifties’ bumper boost to Aussie economy

On earnings by Taylor Swift from the tour:

A look behind the economics reveals Taylor Swift is estimated to personally earn around a total of over $6 billion dollars from the combination of ticket sales, merchandise and movie rights:

• Swift has since added 94 more tour dates. In the last six months, she has increased by 181% the number of “Eras” stadium dates from 52 to 146, according to the New York Times .
• The average merchandise spending per fan was more than double my original estimate. Merchandise sales at the venues could net her proceeds of $1.8 billion.
• Her concert movie — “Taylor Swift: The Eras tour” — will net her another $100 million or so.

After Costs, the ‘Eras’ Could Net Taylor Swift $6 Billion

So yes, this sounds like a win-win. Taylor Swift makes a lot of money, but so does from an economics perspective, every location where Taylor Swift held concerts. It would sound like just keep having concerts, around the world, and not only would Taylor Swift become even richer, so would the entire world. Perhaps all the world needs to solve poverty, is simply to hold music concerts, and the money will flow.

At least in the USA, the money earned by Taylor Swift the tour production remains in the country, but what about in a country like Australia?

Assuming the quoted calculations are at least approximately correct, and they do match the calculations of others, then Taylor Swift is earning approximate $41 million dollars per concert on average from the 146 concerts.

This means that for a country like Australia where Taylor Swift performed 7 concerts and triggered 620,000 ticket sales and consumer spending of $558 million of which it would be calculated Taylor Swift would be able to leave the local Australian economy taking around $280 million with her. Just as well for the Australian economy Taylor Swift added those extra concerts.

The concert was slated to go to Sydney and Melbourne, with new shows added on the following dates:

• Melbourne: MCG, 16 February 2024
• Melbourne: MCG, 17 February 2024
• NEW SHOW! Melbourne: MCG, 18 February 2024
• Sydney: Accor Arena, 23 February 2024
• Sydney: Accor Arena, 24 February 2024
• Sydney: Accor Arena, 25 February 2024
• NEW SHOW! Sydney: Accor Arena, 26 February 2024

Taylor Swift Announces New Australian Eras Tour Dates

Consumer spending as a metric: theory and fails.

It seems logical that consumer spending can only increase if people have more money to spend, so a lift in consumer spending should reflect an economy that is better for the people.

The problems with the theory include:

• Boosts in spending can, like the Taylor Swift concerts, not always reflect an increase consumer spending power.
• The fact that the metric is total spending of all consumers, rather than increased spending per consumer, compels governments to embrace unsustainable population growth as the simplest path to increasing consumer spending
• Consumer spending as a metric creates a barrier to climate measures that can reduce consumer spending such as home solar (which reduces spending on electricity bills) and home charging of EVs (which reduces spending on fossil fuels at gas/service stations).
• A whole range of other desirable ways of reducing costs to consumers become problematic for governments seeking economic growth.

Jobs and workers: code words for consumers?

Consider these points:

1. In many countries, politicians are always talking about more jobs to boost the economy, even when unemployment is below targeted levels and there are said to be labour shortages.
2. In many countries a repeated rhetoric becomes: “our country cannot produce the workers our economy needs”.
3. The ‘ageing population problem‘ is often quoted as creating a need for more workers the country itself cannot produce.
4. All the reports of AI and automation in the future replacing people in the workforce, this never leads to a suggestion that less workers will be needed.

There seems to be a contradiction. However, replacing “jobs” and “workers” with “consumers” can remove the contradiction:

1. In most developed countries, the birthrate would result in population reduction in the absence of immigration, and this would create problems for an economy that is measured by total consumer spending so more consumers are always required for the economy.
2. The real logic is: “our country isn’t producing enough consumers for stability, let alone for growth”.
3. The ‘ageing population problem‘ is largely a byproduct of ending population growth, and as measuring the economy is by total consumer spending, this puts pressure on to find a way to perpetuate population growth.
4. AI and automation may get the work done, but the economy depends on consumers.

Why immigration is primarily about consumers rather than productivity.

Most developed countries have birthrates of 1.7 or below, which is well below replacement rate which is around 2.2 at present. Without immigration, an economy as measured by total consumer spending collapses as a result of any reduction in population, but with sufficient population growth, the economy can grow without needing the spending power of individuals to improve.

In today’s world with so many displaced people needing to migrate, it may be for the best that economies are actively wanting immigration, but on the other side, in a world that has reached peak child, and it is predicted global population will also peak, doesn’t this create a dependency on things being so bad in other countries that people need to leave?

It is not that migration should stop, as the flow of people between countries provides cultural enrichment and combats xenophobia. However, the ideal world we should be trying to achieve would have balanced migration rather than being dependant on countries with less ideal conditions being able to act as population farms to enable population growth where it is not occurring naturally.

An economy that can cater for net immigration is desirable, but an economy that needs immigration is probably far less desirable.

Does measuring total consumer spending deliver what most of the population need?

Measuring total consumer spending does ensure politicians in many countries seek population growth, despite population growth and larger populations both correlating with a decrease in happiness.

To have wealth, we need to produce the following:

• Sustenance/Food
• Knowledge
• “Accessories”: Housing, cars or other transport means, clothes, and the other possessions that bring happiness and productivity.
• Entertainment/the arts.

Then we need to have a system of distribution. Measuring an economy purely by consumer spending may already be breaking down, and AI, the ending of population growth, climate change, and evolution of the “influence industry” all exacerbate the problems with this metric.

Provided there is population growth, measuring total consumer spending provides automatic growth for big business, but that proviso is becoming increasingly problematic.