U.S. consumers treated themselves this summer scooping up concert tickets to likes of Taylor Swift and Beyonce, singing and dancing to sold out shows, while also driving record numbers for U.S. air travel.
The combination is likely behind a big jump in third-quarter gross domestic product (GDP), which is expected to come in north of 4% on Thursday, just about doubling from the second-quarter’s 2.1% read.
"It’s all the kind of revenge spending post-pandemic which is especially concentrated in the service sector. Of course, you know, the poster child of that this summer is, of course, Taylor Swift" Carl Riccadonna, chief U.S. economist at BNP Paribas told FOX Business. It was other concerts. It was sporting events, it was very strong, what we'll call discretionary service spending from hotels, Las Vegas trips, air travel and all these sorts of things" he added.
Taylor Swift recently made history with "Speak Now (Taylor's Version.)" (Tom Cooper / Getty Images)
Swift’s Eras Tour ranked at #1 raking in $780 million , according to Forbes list by gross. Ticket prices rocketed to over $1,000 for some shows on demand from Swifties.
Taylor Swift gave bonuses to her entire team, including her dancers. (Jeff Kravitz/TAS23/Getty Images for TAS Rights Management / Getty Images)
Other high-profile performers also pulled in big bucks including Beyonce’s Renaissance World Tour $460 million, Pink’s $300 million, while Coldplay and Ed Sheeran topped out at over $200 million.
Summer Concert Blockbusters
Taylor Swift's Eras Tour: $780 million
Beyonce's Renaissance World Tour: $460 million
Pink's Summer Carnival: $300 million
Ed Sheeran's Mathematics Tour: $240 million
Coldplay Music of the Spheres World Tour: $275 million
Source: Forbes
KANSAS CITY, MISSOURI - OCTOBER 01: (Editorial Use Only) (Exclusive Coverage) Beyoncé performs onstage during the "RENAISSANCE WORLD TOUR" at GEHA Field at Arrowhead Stadium on October 01, 2023 in Kansas City, Missouri. ((Photo by Kevin Mazur/WireImage for Parkwood)/Getty Images)
Summer travel, often marred with delays due to staffing shortages, also helping move the needle with a record 227 million people scanned through U.S. airports, as reported by TSA.
LOS ANGELES, CA-AUGUST 30, 2023: Charlotte Hitchcock, 3, her sister Hazel, 2, and mother Emily, wait in line to check in their luggage at Southwest Airlines at LAX for their flight to Denver, Colorado. They are from Los Angeles. ((Mel Melcon / Los Angeles Times via Getty Images))
"3Q US GDP is expected to surge to a 4.3% annualized pace driven by a frenzy of summer travel and entertainment, that’s a big jump from Q2 and an unsustainable pace and expected to slow sharply in Q4" said Jeffrey Kleintop, chief global investment strategist, Charles Schwab in an address to clients.
Riccadonna agrees, pointing out a slowdown is already underway and will likely persist through year-end.
"Lending standards have tightened sharply for loans in general and consumer credit in particular, while loan demand has softened, according to various bank sector surveys. Consumer delinquency rates have picked up amid rapidly rising credit card and auto loan rates" he detailed in a research note.
To that point, consumers are falling beyond on their auto loans at a record pace, according to new data from Fitch. The firm also noted the geopolitical and domestic uncertainty swirling as risk factors. With Israel and Hamas at war and the struggle to secure a new Speaker of the House leading the headlines.
BNP now sees growth in the fourth quarter sinking back to 1.5%, well below the standard 2%-3%+ which is considered a decent barometer for a healthy economy.