Welcome to Mind Your Business ! Consider this your weekly guide to understanding what’s happening in the worlds of economics, business and finance. By Peter Armstrong | | | Is Taylor Swift saving the economy? (Mario Anzuoni/Reuters) | | | For all the doom and gloom in the economy, the overarching narrative right now is still largely the story of resilient consumers refusing to back down from spending.
And what, you may ask, are they spending money on?
Taylor Swift tickets.
During the pandemic, consumers bought Peloton bikes, paid to redo their backyards and gobbled up consumer electronics at a record pace.
Households saved money and bought things, but what they craved were experiences.
Enter Taylor Swift and the Eras Tour, which is sweeping the world.
Tickets are selling for irrationally exuberant figures.
Cassie Leonhardt travelled from Vancouver to Arizona for the opening night of the tour. She spent $980 Cdn on a flight. Her hotel cost $590. Her ticket ran her another $550.
She also bought tickets to Swift's Seattle concert. Those ran her $1,150. She had her eye on more expensive tickets even closer to the stage, but just didn't have the cash.
"If I had the capital to do it, I probably would drop $6,000," Leonhardt told me last week. "To have a front row ticket. It's worth it. One hundred per cent for me."
It's not just the local stadium or even Swift that's making piles of money.
Swifties (as fans call themselves) show up and spend money at local restaurants, on local cabs, in local bars.
The online research group QuestionPro crunched the numbers and found the Eras Tour will generate at least $4.6 billion in economic activity in the U.S.
Swift's fans quickly heralded the pop star as an economic heroine. | | | | Economist (and Taylor Swift devotee) Brett House was among the lucky few who got tickets through Ticketmaster for Swift's concert in Detroit earlier this month.
He saw first hand how the Eras Tour is tapping into a widespread sentiment as we emerge from COVID-19.
"I'd say this isn't just about Taylor Swift. This is about the importance of place and being together after a period when we couldn't do so," House told me.
Economic growth has slowed since last year and most expect it will slow further. Indeed, one of the only things keeping a recession at bay is consumer spending on experiences.
"Taylor Swift is a real representative ... of the huge consumer spending power that still exists out there," said House.
The question is, with inflation still so high and interest rates increasingly eating into disposable income, how long can that consumer spending spree last? | | | | Frances Donald is the global chief economist at Manulife Investment Management. She's also (as far as I can tell) the only chief economist who name-drops Taylor Swift in her TED Talk.
She's impressed by the scope and scale of the economic boom Swift has wrought.
But Donald says the really impressive thing is the timing.
"Taylor Swift has perfectly timed her concerts to a period where peak consumer spending and peak employment rates are really a substantial factor of our current economy," she said.
Donald believes a recession is coming and that this sort of spending spree won't last.
"Six months from now, we likely aren't going to see tours of this magnitude, and if they're put in place, they likely won't be nearly as successful," said Donald.
In more ways than one, the Taylor Swift economy mirrors the real economy. People are still desperate for real human experiences, especially with an artist who is so beloved.
Yes, it's easy to look at people spending that kind of money and think, in this economy?
And yes, it's probably safe to assume this won't last.
Now you have a small glimpse into the nearly impossible task that awaits central bankers every day when they try to form policy around an irrational consumer base.
What do you think?
As always, send me a note here: peterarmstrong@cbc.ca
Or continue the conversation on Twitter here.
If you like this newsletter, spread the word. I'm trying to grow our community and would love your help. Just click on the share buttons below. | | | | We will get more information on the resilience of the Canadian consumer this week. Retail sales data for April will be released on Wednesday. | | | | The Bank of Canada will let us peer under the hood at its latest interest rate hike decision. The central bank will release its Summary of Deliberations on Wednesday. | | | | We won't get Canadian consumer inflation data until next week, but on Monday we will get the Industrial Product and Raw Materials Price Indices. These give us a sense of price pressures at the other end of the buying chain. | | | | | Three things to read, watch and listen to this week | | | | This Is Not Financial Advice is a new film unpacking the crypto craze. (Optimist Films) | | 1. The highs and many lows of the crypto craze | | In a lot of ways, the cryptocurrency craze feels like something that happened decades ago. Not just the rise of bitcoin, but the heady days of Dogecoin and meme stocks and a whole new kind of investment class.
But it wasn't all that long ago.
This Is Not Financial Advice is a new documentary from Chris Temple and Zach Ingrasci that premiered this week at the Tribeca Film Festival in New York.
The film documents some of the traders who sank everything they had into financial instruments that were.... well, rather volatile, to say the least.
One of the people featured in the documentary is 33-year-old Glauber Contessoto.
"He emptied out his bank account, maxed out his credit cards, and put everything he had in Dogecoin — 69 days later, his initial investment of $180,000 [US] was worth over $1 million," writes Hiranmayi Srinivasan in a review of the film on the site Investopedia.
Through the pandemic, an army of retail investors flooded into the financial industry. They drove up stocks, they gobbled up crypto and pushed back on the traditional power brokers of Wall Street.
Whether you were cheering for them or rooting against them, they were an undeniable force.
This is Not Financial Advice shows "how cryptocurrency and the democratization of not only the stock market, but financial literacy itself thanks to social media, has changed the way people access financial information and invest. But the film also offers an at-times-painful look into the pitfalls of investing in meme stocks and crypto," writes Srinivasan.
Check out the Investopedia review of This is Not Financial Advice here. Check out the film's web page here. | | | 2. Movie chains bounce back | | I've been keeping a keen eye on the movie business. Not just the releases; I'm also trying to get a general sense of how theatres are doing.
Every time I go to a movie, I'm struck by the increase in activity. More people, seeing more movies, eating more popcorn, playing more video games before and after.
And it turns out my eye-check matches up with the earnings data.
Cineplex says its box-office sales are getting close to the levels it saw before COVID-19. Cineplex earnings for the period April 1-June 11 saw box-office revenues of $134.9 million. Bloomberg BNN reports that's 88 per cent of the same period in 2019.
Ellis Jacob, the CEO of Cineplex, sat down with BNN's Jon Erlichman to discuss the state of the movie business.
"The box office is coming back. The optimism in the business has increased dramatically. There’s a lot of great product," said Jacob.
They spoke about the movies that are set to be released this summer and how the season kicked off with the success of the new Mario Bros. movie, which drew so many back to theatres after a long layoff during COVID.
Erlichman asked about the prospects of a downturn looming and the potential for a recession. Jacob seems unconcerned.
"Historically, the last two recessions, movie attendance actually went up. And the reason being we are a very close and reasonable entertainment experience, compared to going to the other entertainment events," said Jacob.
It's an interesting interview.
Give it a listen here. | | | 3. Canadian streaming's moment | | I try to diversify the business news I read. I guess I think it's important to get out from under the Bloombergs and The Economists and The Wall Street Journals.
I find trade publications endlessly fascinating.
I'll admit, I find Variety magazine more fun than, say, Northern Miner. (Although the latter is good, too. Check it out here.)
This Variety piece on the state of Canadian TV is smart and insightful, hopeful and a little scary.
The headline alone grabs you: "With Netflix, Paramount and Prime Video, Canadian TV is having a moment, but it’s still tough going."
The piece says that over the past 18 months, the big streaming giants have all set up shop (in some way or another) in Canada.
But the old model for how the money was split up among studios, producers and broadcasters has been tossed out the window.
"According to Canadian producers ... getting a TV series off the ground in Canada is harder than ever. There are few buyers, more competition for resources given the influx of service production, and the need to create global content on stitched-together financing models that have only grown more challenging with inflation," writes Amber Dowling.
She spoke to media executives as well as producers like Glen Salzman, co-founder and CEO of Cineflix.
"It’s a tough time, everybody is trying to curtail costs,” he said.
Saltzman was the producer of a bunch of hits, including shows like Property Brothers. He says the streaming companies operate under a different playbook than the broadcasters used to.
"As a producer you don’t make the back end anymore. The network is taking such a big piece— 75 per cent in some cases,” he told Variety. "The producers get their production fee and a small back end, which you usually don’t see because they don’t sell the show well. It’s not a great model for building a company."
The piece is illuminating and raises some key questions about the business model that's kept Canadian TV chugging along for years.
Read the Variety piece here. | | | How the economy looks beyond Bay Street | | | 40 million Canadians | | I still think of Canada as a country of about 30 million people. The truth, of course, is that the last time Canada had 30 million people was 23 years ago.
The population has been steadily growing ever since.
Population growth is perhaps the most important driver of economic growth and financial well-being in this country.
We aren't having enough babies, of course. So to grow, we need more immigration.
A country of 30 million people has different needs than, say, a country of 40 million.
On Friday, the population clock over at Statistics Canada rolled over from 39 million to 40 million. | | | In a news release last week, Statscan's chief statistician, Anil Arora, called it "an exciting milestone for Canada."
The release went on to say many countries are dealing with the impacts of population decline.
"Canada continues to lead the G7 when it comes to population growth. It currently stands at 2.7%, which is the highest level since 1957," Statscan wrote.
It says immigration accounted for 96 per cent of population growth in 2022. If the current pace continues, Statscan says the population could reach 50 million by 2043.
"We may not know who the 40 millionth Canadian is, but they clearly inherit a country that is diverse and vibrant," wrote Statscan.
I'd love to hear from you. Drop me a line at peterarmstrong@cbc.ca. | | | Share this newsletter | | or subscribe if this was forwarded to you. | | | Share this newsletter | | or subscribe if this was forwarded to you. | | | |