Taylor Swift effect boosted US economy, Fed official says

Full stadiums, income for the hotel sector… The American singer’s tour has stimulated the United States economy in recent months, according to the President of the New York Fed.

The “Taylor Swift” effect, a mega pop star whose record-breaking tour of the United States, has stimulated the American economy in recent months, New York Fed President John Williams.

“There’s clearly a Taylor Swift effect on consumer spending because people have been spending on the concert, the hotel, it’s all been a big phenomenon,” the head of the New York branch of the show said. US central bank, during an interview on Bloomberg TV.

A billion-dollar tour

With 146 dates in full stadiums, Taylor Swift, on tour since March in the United States and Mexico, should reach one billion dollars in revenue. She will continue her concerts in Argentina, Europe, Asia, Australia, Canada, until the end of next year.

May was even the strongest month for hotel revenues in Philadelphia (Pennsylvania) since the start of the pandemic, “largely thanks to an influx of visitors for Taylor Swift concerts in the city”, reported a sector official quoted in the Fed’s Beige Book, a survey published in early July.

Overall, “demand is strong. We’re seeing this rotation (of spending) from goods to services that we were talking about a year ago. People are traveling more, going to restaurants, going to shows,” detailed John Williams. In fact, it is now the prices of services that are driving inflation up, while the prices of goods are falling.

The Fed, on the move to slow inflation, has raised its rates 11 times since March 2022, in order to increase the cost of credit, and thus slow consumption and investment. In order, ultimately, to ease the pressure on prices.

Its next meeting will take place on September 19-20, and market participants overwhelmingly expect rates to stay at the current level of 5.25-5.50%, the highest in 22 years.

Inflation is ‘in the right direction’

John Williams did not specify whether he was in favor of keeping rates unchanged or raising them further, simply pointing out that “monetary policy is in a very good position, as it adopts a restrictive policy which produces the desired effects, at namely a better balance between supply and demand”.

The New York Fed Chairman said inflation was “going in the right direction” but said the Fed remained on guard, asking itself the question: “Are we restrictive enough?”.

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