(NEXSTAR) — As Americans continue dealing with inflation in their everyday lives, a new term related to higher costs/lower gains is vexing many business owners. The new term is called “funflation” — but what does it mean exactly?
“Funflation” is a word economists are using to refer to a current trend that bucks traditional consumer behavior during times of inflation. Historically, consumers have tended to cut back overall and spend only on necessary items, like replacing a washing machine or getting a new car. As explained by the New York Times, however, consumers chose to keep spending money on “fun” experiences (not products) through summer 2023.
After several years of COVID-19 shutdowns or limited events, many economists and bankers say data shows people are spending money on experiences they might have missed during lockdowns or illness.
It’s part of the reason the live entertainment industry is currently booming — especially the stadium tours of music superstars Taylor Swift and Beyoncé. Swift’s career-spanning Eras Tour is estimated to have generated about $5 billion in consumer spending (including guest travel, merchandise, food, etc.), according to research firm QuestionPro. All-in-all, concertgoers told the firm they spent around $1,300 per show. Beyoncé’s show, meanwhile, is estimated to have generated $4.5 billion — in addition to becoming the highest-grossing tour by a female artist ever.
In addition to the Eras and Renaissance tours, the cinematic anomaly known as “Barbenheimer” is credited with a major economic boost during this summer. Morgan Stanley even estimates these events contributed “0.70% to consumption growth in the third quarter” in the U.S. That’s about $8.5 billion to the whole economy, not just in entertainment.
But the impact of these major spectacles isn’t being felt across all industries.
Last week, Best Buy CEO Corie Barry blamed “funflation” — and Taylor Swift — for lagging sales of electronics like TVs and sound systems.
“Funflation,’ Taylor Swift… those experiences are really where people are willing to pay,” Barry said at Fortune‘s Most Powerful Women summit. “Bigger ticket items in electronics are not right now where people are interested.”
But the fun isn’t expected to last, at least not by all economists.
In his September “Portfolio Thoughts” letter, Morgan Stanley Senior Portfolio Management Director David Glickstein wrote Morgan Stanley expects “more muted GDP growth” for the remainder of 2023.
“Some of this has to do with the resumption of student loan debt while they [Morgan Stanley] also expect to see a payback in consumer spending after summer spending on ‘Barbenheimer’ and the Taylor Swift/Beyoncé tours.”
Despite there being fewer “funflation” events on the horizon, Glickstein says the probabilities of a recession “have come down markedly.”
Meanwhile, the Eras Tour is breaking even more records, with its October concert film release earning $95-$97 million in its opening weekend, becoming the highest-grossing concert movie in the U.S. ever. Beyoncé’s concert film, “Renaissance: A Film by Beyoncé” hits theaters Dec. 1.