Living in Taylor's (and Barbie's and Messi's) World
In Today's Issue:
Focus: Living in Taylor's (and Barbie's and Messi's) World
In the markets: Nvidia Nchanged; Not Better; Hike No Hike
Moneyfitt Explains: Spanked SPAC
Dollar Tree joined Foot Locker, Macy's, Estée Lauder, Target, Peloton, Home Depot and an endless string of other (non-luxury) retailers in lowering sales guidance, citing weakened consumer demand and theft concerns. Despite attracting price-conscious customers due to inflation (much as Walmart has), the discount retailer's profits dropped 43% on lower consumer discretionary spending. Speciality retailer Bath & Body Works then joined the pity party, warning of a sharper drop in sales of its home fragrances and personal care items. To counter increased labour and production expenses, the retailer hiked prices, which doesn't work quite so well for non-essentials and weakened demand even further. And then data for durable goods (which include washing machines, cars and aircraft) showed orders decreasing 5.2% in July from the previous month, the biggest drop since April 2020 and much worse than the 4% expected.
Taylor is feeling your pain, retailers and manufacturers of consumer durables (but not financially)
- Image credit: Tenor
..... ▷ But overall US consumer spending is still booming, partly on continued strength in the surprisingly still red-hot labour market! Though 2020-21 Covid stimmy-checks have been pretty much all spent up, overall savings in the economy are still high enough to support spending at least through to the fourth quarter. And consumers are refusing to quit spending, though more are turning to credit cards (balances shot up to over $1 trillion for the first time ever) and -- even worse -- buy now pay later (BNPL) schemes. BNPL provider Affirm just saw its shares jump 7% after the market close after beating expectations with gross merchandise volume (GMV, the sum of all its transactions) leaping 25% to $5.5bn by feeding off 16.5mn active consumers.
..... ▷ Where Americans ARE spending their dollars on are tickets for Mattel's Barbie or Nintendo's Super Mario Bros. movies or Taylor Swift's Eras or Beyoncé's Renaissance World tours (if they can get any) or anywhere Lionel Messi's Inter Miami is playing (... or streaming.) And on flights and ride-hailing and hotels and vacations and experiences, rather than on washing machines, sneakers, scented candles, iPhones and Peloton bikes. US gross domestic product (GDP) rose at a 2.4% annualised pace in the second quarter, far better than the 2% estimated by Wall Street's Finest, driven heavily by consumer spending, since 2/3rds of the US economy is reliant on consumer spending on goods AND services.
..... ▷ The Atlanta Federal Reserve Bank uses a "nowcast" mechanical model based on current data to dispassionately project GDP (GDPNow, not an official forecast) and the latest release on Thursday showed third-quarter GDP growth of 5.9%, which, if it comes through, would be far higher than the Fed would feel comfortable with to get the inflation rate down to 2% from the still-too-high 4.10% Personal Consumption Expenditures (PCE) inflation rate in July 2023. (This was down from 4.58% in June 2023.)
The GDPNow has been accurate within 0.1 percentage points of the final GDP number in 73% of cases in over a decade. And it's trending much too high. - Image credit: The Federal Reserve Bank of Atlanta
Swiftonomics Corner
- Fortune Magazine estimated Eras tour's net consumer spending to be $4.6 billion in the US alone. Huge, but, sadly for overexcited Swifties, not in itself a significant mover of the needle in the US's $26 trillion economy.
- But combined with Beyoncé’s tour and the other experiences American consumers are pouring their money and borrowings into? Most definitely.
-
-
Click here for more of today's MoneyFitt Morning. Make sure to subscribe, and please Like and Comment below!
Click here for more of today's MoneyFitt Morning. Make sure to subscribe, and please Like and Comment below!
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
CEO, Co-founder MoneyFitt. Editor-in-chief of The MoneyFitt Morning, a daily business and investing newsletter.
7Followers
4Following
17Visitors
Follow
MoneyFitt Ka-ming OP :
From TIME Magazine: The [Taylor Swift Eras] tour has become the perfect outing for concert-goers itching for a post-pandemic live music immersive experience. “We are in an experience economy where people crave going out and participating in social events... It's no surprise that people are flocking to this #erastour experience in what is increasingly an otherwise digital environment we live in.” ... The Eras Tour is projected to generate close to $5 billion in consumer spending in the United States alone. “If Taylor Swift were an economy, she’d be bigger than 50 countries.”
An #experiences economy. (But don't forget the #merchandising!)
(At least that last part spared us the usual journalistic nonsense comparing the stock of one thing, like the market capitalisation of a company, with the flow of another, like the GDP of a country!)
https://time.com/6307420/taylor-swift-eras-tour-money-economy/