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Taylor Swift\u2019s Eras tour has been a revelation across Europe. Everyone from the Royal family to Paul McCartney danced to her three-and-a-half-hour shows as economists fell over themselves to hail the \u201cTaylor Effect\u201d on the region\u2019s economy.<\/p>\n
However, the head of the Eurozone\u2019s central bank seems to think people who argue that she has also become an economic force could benefit from a couple of lessons in macroeconomics.<\/p>\n
Christine Lagarde, president of the European Central Bank (ECB), has laughed off suggestions that Taylor Swift is to blame for stubborn inflation in the region.<\/p>\n
The latest reading<\/a> showed Eurozone inflation fell to 2.5% in June, closer to its target of 2%. However, services inflation, which Swift\u2019s presence would contribute to, has remained elevated, preventing the bank from a second interest rate cut after slashing its base rate in June.<\/p>\n Because Swift\u2019s time in Europe is temporary, her perceived contribution to inflation wouldn\u2019t be \u201csticky.\u201d That caused an exasperated Lagarde to dismiss the idea that she was a meaningful contributor to the continent\u2019s stubborn price rises.\u00a0\u00a0<\/p>\n \u201cIt\u2019s not just Taylor Swift, you know,\u201d Lagarde told CNBC<\/em> at the ECB Forum. \u201cOthers have come as well.\u201d<\/p>\n Instead, Lagarde said higher wages for service employees and rising business profits needed were the key metrics to consider before the ECB could cut rates again.<\/p>\n Sweden\u2019s Central Bank namechecked the Taylor Swift effect as it disclosed an increase in inflation<\/a> in the same month the singer performed in the country.\u00a0<\/p>\n The Riksbank said hotel prices rose 11% in May, fuelled by \u201cgig-trippers<\/a>\u201d following Swift across the continent. That was a bigger increase than when Beyonce performed a year earlier.\u00a0<\/p>\n However, while Swift\u2019s presence might have contributed to some price increases, it makes up a small part of the wider inflation pie.\u00a0<\/p>\n The \u201cTaylor Effect\u201d has been documented in every region where she has taken her bumper Eras tour this year. It\u2019s even helped her American Football boyfriend Travis Kelce cash in, saying he now commands more lucrative sponsors<\/a> for his New Heights <\/em>podcast with his brother Jason since his romance with Swift went public.\u00a0<\/p>\n Several banks and think tanks have run economic analysis pieces that put her economic impact into the billions. The impact in Europe is expected to be bigger<\/a> than in the U.S., as Americans took advantage of a strong dollar and EU regulations<\/a> on ticket resale prices to get a better deal.\u00a0<\/p>\n One report by Barclaycard suggested Taylor Swift\u2019s U.K. legs would provide a \u00a31 billion ($1.3 billion) injection to the country\u2019s economy. But inevitably, the source of those figures proved to be\u00a0<\/p>\n The Financial Times Alphaville<\/em><\/a> <\/em>investigated the report and found eyebrow-raising figures behind the calculation, including an average travel spend of \u00a3110.80 to get to her gigs and \u00a360 on a meal beforehand.<\/p>\n The survey was also based on a small sample size of 200 people who either had tickets or were \u201clooking to secure\u201d tickets to one of Swift\u2019s concerts. Barclaycard also informed Alphaville <\/em>that the figures were an average of the responses, with the more reliable median expected to be lower.<\/p>\n Swift is undoubtedly a generational tour de force, but analysts should look elsewhere before blaming her for European inflation\u2019s cruel summer.<\/p>\n<\/div>\nThe Taylor Effect?<\/h2>\n
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