Why Taylor Swift’s economic boom may not be real

FRANKFURT (Reuters) — Taylor Swift is taking Europe by storm and some experts are predicting unexpected commercial success as fans flock to dozens of sold-out concerts from Dublin to Vienna and beyond.

It is hoped that Swift, along with the Olympic Games in France and the 2024 European Football Championship in Germany, will give a new boost to the continent, which has narrowly avoided recession over the past two years and has lagged far behind the United States.

However, there is a problem: It is possible that “Swiftonomics” does not even exist.

While Swift may be a megastar revolutionizing the music industry, the economic benefit of her touring performances to the local economy is less pronounced.

A good example of this is Stockholm. Almost 180,000 fans attended their three shows in May, half of them from abroad. The city generated revenue of almost 850 million krone (81 million dollars).

For Stockholm, that’s a great three-day journey. But even for Sweden’s medium-sized economy, that’s a drop in the ocean. With an annual production of 623 billion dollars, Sweden ranks eighth in the European Union.

“This additional revenue is a great weekend boost for Stockholm and especially for the tourism sector,” said Carl Bergkvist, chief economist at the Stockholm Chamber of Commerce.

“But it’s just a weekend without any visible or significant impact on overall economic growth.”

Hotels and restaurants made fortunes, while sales of cowboy hats rose 155 percent, the chamber estimates.

The impact on prices is similarly small and may even be smaller than Beyoncé’s performance a year earlier, which sparked a temporary inflation scare. Swedish inflation has since fallen from 10% to just over 2%.

“Is there a Taylor Swift effect? ​​At best, it is extremely small and temporary,” says Carsten Brzeski, economist at ING.

“There are extensive studies in the run-up to major events that show the economic benefits, but afterwards you only have to look with a magnifying glass to see these so-called benefits when you find them in the numbers,” said Brzeski.

The same applies to major sporting events such as the Olympic Games or the 2024 European Football Championship. They are a boon for restaurants, beer sales and merchandise sellers, but have no lasting impact on consumer behavior.

“Consumer spending is spending that would be done anyway and tends to be a form of substitution,” explains Professor Simon Shibli of Sheffield Hallam University.

The argument: The money for a concert ticket or a hotel would have to be paid from the family budget, leaving less for other expenses such as restaurants or travel.

The story goes on

The not entirely serious “draught beer index” of Danske Bank showed massive price increases during the Danish national team’s European Championship. At a match against England, revenue from pubs and restaurants rose by 106 percent compared to normal revenue.

“At a micro level, such events provide a boost, but even this is small and temporary,” says Piet Haines Christiansen of Danske. “They are relevant to certain industries, such as hotels and restaurants wherever Taylor Swift performs, or beer sales in countries where football is played.”

Some local media outlets pounced on Barclays’ investigation into Swifties’ spending habits last month, claiming their concerts would bring a billion pounds to the British economy.

But in addition to the likely substitution effect they will have on other expenses, there is the fact that much of the revenue from Swift’s tour will end up in the United States, further reducing the already small local economic benefit.

Even in economies the size of Great Britain or those of continental Europe, such transfers would have no impact on the trade balance: the 20 countries of the euro zone recorded an export-import balance of no less than 39 billion euros in April alone.

(Reporting by Balazs Koranyi; Editing by Mark John and Tomasz Janowski)