Consumer spending in the United States is expected to receive a boost in the third quarter of the year, driven by events such as music tours by Taylor Swift and Beyoncé, as well as summer movie blockbusters like “Barbie” and “Oppenheimer.” These events are predicted to contribute to a 1.9% increase in real spending for the quarter, providing a temporary economic lift. However, economists are cautioning that this boost may be short-lived.
Morgan Stanley economist Sarah Wolfe highlighted the extraordinary nature of these revenue-generating events, which are set to positively impact consumption growth in the third quarter. Still, she noted that these sectors, though significant in this context, make up a small portion of the overall personal consumption expenditures price index (PCE).
The concern is that the end of music tours and a decline in theater viewership for blockbuster films in the latter part of the year could result in a “hangover effect” on consumer spending in the fourth quarter, potentially reducing it by 0.6 percentage points. Additionally, the return of student loan payments, which had been deferred, is expected to further restrain consumption by about an eighth of a percentage point.
While the economic impact of events like Taylor Swift and Beyoncé tours, as well as successful movie releases, has been substantial, economists anticipate that these factors will unwind in the fourth quarter. The expiration of the student loan moratorium in October is also expected to weigh on consumer spending.
This potential slowdown in consumer spending could influence the Federal Reserve’s monetary policy decisions, particularly as the central bank continues to grapple with inflation concerns. Economists like Sarah Wolfe suggest that the Fed may use the cultural and economic slowdown as a reason to exercise patience in determining the future path of interest rates.
In summary, while the U.S. economy is set to receive a temporary boost from entertainment and cultural events in the third quarter, economists are wary of a subsequent slowdown in consumer spending in the fourth quarter, which could have implications for monetary policy decisions.
Read More: https://thecioworld.com/