Barbenheimer & Beyonswift Aren’t Done Saving the U.S. Economy 

There’s a key consumer spending gauge called personal-consumption expenditures price index (PCE) that economists like to watch in these fraught times to get a sense of inflation levels. What Hollywood produces barely registers on the PCE compared with goods such as food and clothing; movie consumption typically accounts for just 0.2% of the total index, and non-sports live entertainment represents a mere 0.05%.  

And yet the performance of both “Barbie” and “Oppenheimer” at the box office, as well as tours featuring Beyoncé and Taylor Swift, stimulated enough PCE growth over the summer to translate to a stunning $8.5 billion in growth to the U.S. economy in the third quarter, according to Morgan Stanley.

However, Morgan Stanley also fretted the economy is heading for a fall next quarter when Barbenheimer and Beyonswift are no longer in rotation and another factor comes into play that dampens spending among younger consumers. “In 4Q, these factors not only unwind, but the October expiration of the student loan moratorium further weighs on consumption,” economist Sarah A. Wolfe wrote in an Aug. 30 research note. 

Well, that’s a bummer. But VIP+ can muster a little more optimism for the final quarter of the year than Morgan Stanley that the entertainment industry can continue to save the U.S. economy’s bacon.  

To understand why, start with the recognition that profits are about more than just ticket receipts, though those are impressive in their own right. Take Beyonswift, for instance. 

Taylor Swift’s Eras Tour ends its jaw-dropping run in November and is set to be the biggest tour of all time. Ticket sales in North America are projected to gross $2.2 billion, and the tour is estimated to generate nearly $5 billion in consumer spending in the U.S. alone. Exact figures are yet to be released for Beyoncé’s Renaissance Tour, but some project it could match or even surpass the Eras Tour.  

But when thinking about concerts and tours specifically, the economic impact is even more wide-reaching. Consumers aren’t just purchasing tickets, especially if they’re traveling to different cities to attend. They often also purchase airfare, hotel rooms and restaurant meals. And in Beyonce’s case, searches for nail technicians and hairstylists in local cities spiked as concertgoers shelled out to look their best for Queen Bey. 

Then there’s the summer box-office double feature of “Barbie” and “Oppenheimer.” Since being released on July 21, “Barbie” alone has grossed nearly $1.4 billion and could eventually surpass the $2 billion mark. “Oppenheimer” may not have performed as well as “Barbie,” but it did become the third-largest movie this year. The Christopher Nolan film already surpassed $700 million globally and continues to drive audiences to more expensive viewing formats like Imax. 

Nevertheless, all good things come to an end. But the end doesn’t come quite as early as Morgan Stanley might anticipate.

First, the Eras Tour is headed to the big screen in October, which is the start of Q4. The movie of the iconic tour is scheduled to run through the beginning of November. The initial response to the film was astounding. Presale tickets at AMC Theatres raked in a whopping $26 million and set a single-day ticket sale record at the chain. It is expected that the movie’s run could be extended as a result of the strong demand from fans.

Second, the success of “Barbie” doesn’t end at the box office. Barbie doll maker Mattel is capitalizing on its IP with merchandise sales. Mattel’s latest quarterly earnings did not capture the success of the film, but Q3 results released in the fall will provide further evidence of the lingering impact of the movie’s success.  

Furthermore, Q4 is the important holiday season for the retailer. Barbie doll sales over that key season could be a meaningful contributor to the company’s top line during the quarter. Though as Mattel CEO Ynon Kreiz noted at Goldman Sachs’ Communacopia conference last week, the reverberations from the movie will last much longer. “It’s not just about the quarter or the year,” he said. “And we believe the benefit will carry forward for years to come.”

As for concerns that spending on concerts will be impacted when student loan payments resume next month, Live Nation president/CFO Joe Berchtold professed to be unconcerned on his company’s earnings call in July, characterizing the momentum audiences have gathered in the post-pandemic era as “about 10 times the impact of any potential headwind coming from the student loan payments needing to get made.” 

Consumer spending remains strong for the time being, and some economists and even the Federal Reserve said in July it no longer expects a recession in the U.S. following economic data showing a resilient economy. While there has been some moderation in growth, the U.S. economy is still very much in expansion mode.

The entertainment industry won’t always have Taylor Swift, Beyoncé and blockbuster movie releases to create massive shifts in economic growth, but this summer was proof that live events, concerts, sports, films and other forms of entertainment do have the power to sustain and support a healthy economy.

That might seem like a counterintuitive notion coming from an industry currently beset by strikes and an internecine battle between Disney and Charter weighing down all media stocks, but Hollywood loves nothing more than a plucky protagonist who finds a way against all odds.