If you’re not aware of Taylor Swift’s huge tour, I envy you a bit — summer must be nice and cool in the cave you’re living in. The Eras Tour started in March 2023 and consists of 152 shows spanning five continents that will conclude in December 2024. It’s by far the highest-grossing tour in history and the first to ever surpass $1 billion in revenue (and it’s still going).
The impact of the tour, however, goes beyond just income.
Swift’s tour triggered a cultural frenzy, similar to Beatlesmania in the 1960s. Fans went crazy and paid big money to attend the concerts. Particularly in Europe, where international travel is relatively easy, many fans came from abroad to see the concerts. They paid hundreds of dollars for concert tickets, hundreds for more accommodation and travel, and presumably a few hundred more for souvenirs, food, and other stuff.
In places like Sweden and the UK, this even had an impact on national inflation.
Swifties, culture, and inflation
Inflation is the rate at which the general prices for goods and services rises, leading to a decrease in purchasing power. As prices increase, each unit of currency buys fewer goods and services, effectively diminishing its value. Sweden’s core inflation rate unexpectedly increased, influenced by Taylor Swift’s concerts and the Eurovision Song Contest. These events drove up service prices, particularly for hotels, and restaurants.
Swedish core inflation (which excludes energy costs and interest-rate effects) rose by 3% from the previous year, exceeding both analyst expectations and the central bank’s forecast. A small part of this inflation was driven by a surge in accommodation prices due to 180,000 Eras concert attendees in Stockholm. Stockholm has around 1 million people, and Sweden has around 10 million.
It’s not only Sweden, either.
The unexpected surge in inflation due to Taylor Swift’s concerts is mirrored by events in the UK, where The Eras Tour and other high-profile events are driving faster price increases in the services sector. Swift’s concerts have significantly raised hotel and service prices. Naturally, this complicates efforts by British and Eurozone policymakers to assess inflation trends and make decisions on interest rates. So, essentially, Swift’s concerts are causing inflation.
The Swift effect
This phenomenon, dubbed the “Swift effect,” reflects broader trends where major events fuel temporary spikes in service prices, impacting policy decisions. As policymakers navigate these anomalies, central banks must carefully interpret data to avoid making premature decisions based on such events. Analysts note that such events can distort inflation readings, making it challenging to determine underlying inflation strength.
However, the European Central Bank (ECB) says this effect isn’t “sticky”. Christine Lagarde, president of the ECB, told CNBC that the Swift Effect is not a meaningful, long-term contributor, but more of a quirky temporary effect.
In Sweden, the central bank acknowledged the Swift effect, noting an 11% rise in hotel prices in May. But, while Swift’s presence might have contributed to price hikes, it’s unlikely to constitute a significant portion of overall inflation.
Nevertheless, the Swift Effect has been documented widely, with significant economic impacts wherever she performs. Her concerts have not only influenced inflation rates but have also brought substantial financial benefits to local economies. For instance, reports indicate that Swift’s UK tour period could inject £1 billion into the economy, driven by spending on tickets, accommodation, travel, and other related expenses. This massive economic influence underscores the broader cultural and economic significance of Swift’s tour.
This isn’t the only effect Swifties are having.
Taylor Swift’s concerts have also generated seismic activity equivalent to a 2.3 magnitude earthquake. While this is not enough to cause any damage, it still surpasses previous records from football games and other concerts.
While policymakers and economists may grapple with the temporary effects of such large-scale events, the enduring legacy of Swift’s tour is clear: it’s more than just about music and money. It’s reshaped the entertainment industry and left a tangible mark on the global economy. As Swifties eagerly await the next leg of the tour, economists are taking notes.
