The Echo-nomist

After being robbed of two years of human interaction, it’s understandable that people are going crazy as the world finally reopens. People are actually celebrating festivals and occasions with parties and dance floors instead of conducting Zoom ceremonies. 2022 is the year to “catch up” with all the experiences that we missed out on during the pandemic (we missed a lot).

People aren’t the only ones catching up, the economy is too! In the States, inflation hit a fresh 40-year high. AGAIN! The Fed had to step in to do something about the rise in prices. So they starting raising rates in march. At the beginning of the pandemic, the Fed slashed rates and made it nearly zero percent. That worked out well for a bit. However, inflation has gone up since then. Last week, the fed announced the largest hike in two decades! What’s worse, the Federal Reserve chair, Jerome Powell indicated that he wouldn’t hesitate to do it again.

A rise in the interest rates is what the country needs right now to reduce economic demand and maintain price stability. Higher interest rates make borrowing pricier (that credit card bill is only going to go up) and makes savings more attractive. The Fed is going to attempt to cool down the economy so that it leads to lower prices but doesn’t spiral into recession.

But something doesn’t add up… The consumers aren’t freaking out about the rise in prices (except when it comes to fuel). Instead, consumer spending surged 1.1% in March, boosted by a demand for international getaways, dining out at restaurants and hotels stays (source: Robinhood). There were also increases in healthcare spending and outlays on recreation and transportation services.

Spending on goods increase 1.2%, mostly reflecting gasoline and other energy products, as well as food, whose prices have risen sharply. Spending on long lasting goods, like motor cars, however, fell for the second straight month owing to shortages (think: the chip shortage).

“There’s no stopping me” ~Freddie Mercury and consumers who have been trapped cause of the pandemic

Too many things to do and too little time? You ain’t the only one!

4 weddings and a concert!

2022 is set to ring the most nuptials is nearly four decades! An estimated 2.5 million weddings are expected to take place in the U.S this year for the first time since 1984 (source: wsj). It’s partly due to a backlog of weddings due to the pandemic, along with new bookings. Couples who got engaged in 2019, 2020, 2021 are still waiting to get married. Now that they’re finally able to celebrate, after waiting for so long, they are going big. Toit nups: people aren’t afraid of spending some of their savings to have a grand wedding as wedding-related indulgences are set to hit $68 billion. Big bills 🤝 big celebrations.

Wedding parties are booking hotel blocks at record rates for longer periods, hotel executives say. Couples are holding events with larger guest lists, reverting to form after a wave of smaller guest lists and venues due to the virus. Some are holding multiday events to make up for lost time with friends and family.

The guests’ wallets might be lighter after attending all the weddings. In 2021, guests spent an average of $660 to attend out-of-town weddings if they travelled by car, and an average of $1.270 if they travelled by a plane according to a survey from wedding-planning website Knot. This year they should be ready to spend at least 10% more because of inflation and travel demand.

For summer weddings, guests are competing with other wedding guests, leisure travelers and families on vacation. Earlier guests used to book hotels a few weeks in advance. Now, they are booking months in advance and are required to pay higher rates according to Abby Rodriguez, the director of catering at Warwick Melrose- Dallas hotel. Couples usually negotiate some discount for their guests by guaranteeing a certain number of hotel bookings. However, because the occupancies have been strong in hotels, they aren’t giving away as many discounted rooms as easily.

The hotels feel like they could do with a few extra rooms right now. The average size of a wedding is projected to be 129 in 2022, almost back to a pre-covid average of 131 in 2019. Other than an increased number of guests and events, families and guests rent houses and Airbnb’s and stay in the area for an extended stretch around the wedding. Available rental homes in the popular wedding destinations are scarce now, giving a rise to prices of these rentals and pushing couples to ask for a larger block of rooms than they had in the past.

Marriott International Inc. is seeing a rise in wedding related groups for 2022 in U.S and Canada according to a spokesperson. Hawaii, San Diego and Fort Lauderdale, Fla., are the markets that experienced the highest year-on-year increase in bookings. The bookings in their Hawaii branch are up nearly 300%!

Hawaii was one of the states with the tightest restrictions on gatherings, leading to many scaled back or postponed weddings and events in 2020 and 2021. So the new year came with a flood of new wedding bookings.

Enough about weddings… Live music has also made a come back! Artists from Billie Eilish to Olivia Rodrigo to Coldplay are filled with excitement to return to the stage. Fans seem to be reciprocating the excitement and love by filling up the venue and sold out shows.

Live Nation presents itself as the largest live entertainment business in the world with over 310 million fans. They reported that the confirmed show bookings are up double digits for each amphitheaters, arenas, stadiums and festivals for 2022 through the end of April, versus the same period in 2019. Their transacted ticket volume was approximately 63 million tickets for Q1 of 2022, approximately 7 million tickets higher than the first quarter of 2019. This quarter was their highest ever for transacted gross transaction value (GTV), excluding refunds, trailing only behind the 4th quarter for 2021, with march being the highest month ever for transacted GTV.

Ticketing was the best performing segment for Live Nation this quarter with their secondary ticketing GTV growth up 106% compared to the first quarter of 2019. It was driven largely by an increase in the average resale ticket price being up almost 20% compared to Q1 2019 as tremendous fan demand pushed up the market price. This has been their best first quarter ever. (source: Live Nation’s Q1’22 reports)

Other than tickets for live shows, another thing that supplemented this unmatched growth was leveraging its team and league partnerships across the NBA, NFL and other sporting events effectively. 96% of the fans used digital tickets to enter the NBA and NFL games in the first quarter of 2022. 72% of the Live Nation’s tickets globally were digital in the quarter, compared to 33% in the first quarter of 2019.

For the past two years, sporting events have taken place without a live audience or with only a partially filled stadium. This year, most events returned with a live audience. The Indian Premiere League had all matches in the presence of a live audience. Premier League, UEFA Champions League, NBA, Super Bowl etc. all took place as it has in years before the pandemic with fans cheering for their team. Fans aren’t holding back from spending money to support their favourite players as most of the matches in major leagues have been sold out.

All of this comes at a time when inflation is rising beyond the government’s control. Hence, they’re resorting to use the only tool they can- interest rates. They’re saying they can take care of inflation without causing a recession but only time will tell. If they raise the rates too much and too suddenly, consumers could tighten their wallets. They are already unhappy with the rise in oil prices as it’s affecting their daily lives. Consumers have reduced spending on online shopping, appliances, furniture, cars etc. (source: Robinhood Snacks). If inflation remains high, people might cut back on experiences too…