Taylor Swift: Explainer: What is ‘funflation’ and how Taylor Swift is boosting US economy

According to a Bank of America report, the recent boom in entertainment and live experiences spending, driven by Taylor Swift, Beyoncé, and “Barbenheimer”, may not be a fleeting phenomenon, but a lasting trend.
The Bank of America report titled “Funflation in Full Force”, describes ‘funflation’ as a phenomenon of people spending more on live entertainment due to pent-up demand and increased savings after the Covid-19 pandemic.The Taylor Swift andBeyonce tours are some examples of ‘funflation’ economy. According to the report, funflation may lead to a lasting shift in consumer behavior that will benefit the entertainment industry in the long run.

The live entertainment sector is shining brighter than ever in the media and entertainment landscape, Bank of America analyst Jessica Reif Ehrlich said.

Ehrlich identified five factors that will fuel the long-term growth of the industry: the ongoing shift of consumer spending towards services and experiences; the ability to charge higher prices amid rising demand; the positive impact of social media apps like TikTok on global fan base and awareness; the resilience of live events against digital disruption; and the emergence of experiential marketing.
“Unsurprisingly, we think that talent, especially artists with huge fan followings, will be able to get more value out of the ecosystem (mainly driven by increasing supply and ticket pricing), while venues, which have multiple independent revenue streams, will capture the most value,” Ehrlich said.

According to a Bloomberg report, Swift and Beyonce tours combined may add an estimated $5.4 billion to the US gross domestic product.
Taylor Swift is one of the artists who is capitalizing on the funflation effect with her Eras Tour, a stadium arena experience that pays homage to every era of her 17-year career. The tour, which kicked off in March 2023 and will run until November 2024, is set to become the biggest tour of all time, with a projected gross of $2.2 billion in North American ticket sales alone. Swift’s tour is not only smashing music industry records, but also boosting the economy and creating jobs in the cities she visits.

According to a report from survey provider QuestionPro, the total economic impact of Swift’s tour will be close to $5 billion, including ticket sales, travel, outfits, food and drink. The report estimates that each Eras show generates around $36 million in direct and indirect spending for the local economy, supporting more than 300 jobs per show. The report also found that Swift’s fans are willing to travel long distances and spend big on her concerts, with an average spending of $1,300 per person.

According to data from Bernstein, the average revenue generated per room in US states during Swift’s visits exceeded the national benchmark by over 4 percentage points. In these states, the revenue per room increased by approximately 7% on average during the months of her visits compared to the same periods the previous year, a CNBC report said
Swift’s tour is also driving up the demand for streaming services, as fans revisit her old albums and songs after attending her shows. According to Spotify, Swift’s catalog saw a nearly 80% spike in streams in the weeks after the tour kicked off. Swift’s music also has a positive spillover effect on other artists, as her fans discover new songs and genres through her curated playlists and collaborations.