Why Swift//Beyoncé/Barbie winds up hurting the US economy this fall

The female power economy is set for recession.

A combination of a Barbie movie and tours by Taylor Swift and Beyoncé helped spur a surprise boost in the U.S. economy this summer. In total, concerts and blockbuster movies are expected to add $8.5 billion to U.S. growth in the current quarter, according to Morgan Stanley, good for about a third of the company’s plans for consumption in the third quarter.

But economists expect their windfall in the final quarter of the year could contribute to a slowdown in personal consumption.

„Consumer spending in 3Q23 benefited from strong consumer spending on Barbenheimer, Taylor Swift’s 'The Eras’ tour and Beyoncé’s 'Renaissance’ tour,” Morgan Stanley economist Sarah Wolff wrote in a note Wednesday. „Reversing these events, real (personal consumer spending) will fall 1.4% in 4Q23 when the student loan moratorium expires.”

GDP tour? Taylor Swift in Nashville. (AP Photo/George Walker IV, File)

In July, Barbie and Taylor Swift’s tour of the era earned A scream From Federal Reserve Chair Jerome Powell on Consumer Resilience. A day later, Bank of America noted that „Oppenheimer,” a double feature of Barbie and „Oppenheimer,” could boost weekly consumer spending in the opening weekend, according to BofA data. Swift’s tour alone may have grossed $2 billion in North American ticket sales alone. For CNN Business.

But Swift’s tour has already wrapped up in North America. And traditionally, theatrical sales fade when a movie releases. As for Beyoncé, her tour ends on October 1, the first day of the fourth quarter. Morgan Stanley sees the absence of this „one-off significant lift” to deliver a hangover effect on consumption in the final three months of 2023.

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The end of the student loan moratorium is expected to weigh on consumption in the fourth quarter and the absence of popular movies and concert tours.

The end of the student loan moratorium is expected to weigh on consumption in the fourth quarter and the absence of popular movies and concert tours.

Just as the Barbie boom during the summer helped explain a better-than-expected economy, its absence helps explain what many economists believe is the story of the fall and winter: consumer stagnation.

Economic indicators coming out this week showed signs of softening in the labor market, which is seen as a driver of consumer spending. Job openings fell below 9 million for the first time in more than two years in July, and a consumer confidence survey showed Americans feeling more cautious about the labor market.

The labor market cooling comes as economic growth slowed to 2.1% in the second quarter from 2.4% on Wednesday.

„Incoming data for Q3 show that the economy continues to expand, but with some signs of moderation,” Wells Fargo economist Shannon Seery wrote in a note to clients on Wednesday. „We continue to expect the economy to gradually slow in the second half of the year.”

Other economic interventions

While Morgan Stanley isn’t the only firm to see the end of Taylor Swift’s tour as an economic downturn, there will be other firm challenges later in the year. Oxford Economics’ chief U.S. economist Ryan Sweet noted that tighter credit standards and an expected pullback from fiscal policy will be the catalysts for a recession until the end of 2023.

Additionally, the student loan moratorium ends Oct. 1, affecting 26.6 million borrowers for Morgan Stanley. Morgan Stanley estimates a 0.8 percentage point drag on real PCE growth in the fourth quarter from a resurgence in student loan payments, while a rule implemented by President Biden will help some students wait an extra year to pay.

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Excluding one-time events to counter student loan interventions, Morgan Stanley sees the economy expanding at a 0.1% pace in the fourth quarter.

Hence the dominant entertainer’s eye-catching sales story That moment is not expected to last, which explains how the US economy surprised in the summer of 2023. And the post-pandemic economy will become the next era of consumerism, looking for a new catalyst to spur consumer spending. „Problem.”

Josh Shafer is a Yahoo Finance reporter.

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