“Despite the slowing recovery in tourism in the region overall, one contact highlighted that May was the strongest month for hotel revenue in Philadelphia since the onset of the pandemic, in large part due to an influx of guests for the Taylor Swift concerts in the city,” -Philadelphia Federal Reserve Bank
The economy has surprised most of the economists wearing bowties and three-piece suits, as they all used things like M2 crashing, the yield curve, and manufacturing surveys to come to the conclusion that the economy was headed for a near-certain recession earlier this year. Well, that hasn’t happened at all, as the consumer remained incredibly resilient. As a result, there’s been no recession, and fortunately, no clues one is coming anytime soon.
The strong economy is one reason stocks just had one of their best first halves ever, as a major recession was being priced in late last year and the better economy opened the door for better than expected stock gains.
We half joked on our Facts vs Feelings podcast way back in November that the incredible demand for Taylor Swift tickets said there was no way a recession was coming later this summer. Full disclosure, I spent nearly 5 hours trying to buy tickets when they went on sale, so I was in the middle of it all with millions of Swifties.
Fast forward to the summer of T. Swizzle and now we have Fed officials actually citing hotel demand for her shows as a reason for economic strength. She was here in Cincinnati two weeks ago and the city was about as alive as it had been since Joey B. took them to the Super Bowl two seasons ago.
In all seriousness, all you had to do was look around to know how silly all the recession talk really was. Sonu and I were in the lonely camp earlier this year that a recession wasn’t coming. The main reason was the consumer was so strong and the labor market was healthy. Remember, the consumer makes up close to 70% of GDP and it would be hard to have a recession with most hotels, restaurants, and airports packed over the past year plus.
I’d say those economists could have done us all a favor and just gone out to dinner a few times late last year. They would have seen what, looking back, was so clear and obvious.
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It isn’t all Taylor Swift mania of course, as housing has likely bottomed and manufacturing is in the process of bottoming. Those two areas make up nearly 20% of GDP and will soon be tailwinds not headwinds to the economy.
What could be next you ask? The good news is we still don’t see a recession in ’23, as we discussed in the just released Mid-Year Outlook ’23: Edging Closer to Normal. Additionally, Sonu and I discussed our second half outlook in this week’s Facts vs Feelings podcast. Lastly, you can watch me do my best to break it all down in only five minutes in the video below.
In conclusion, did I succeed in getting tickets to the Cincinnati show you ask? Here’s my daughter and wife, Susanna and Emily two weeks ago keeping the economy moving, singing Karma is My Boyfriend, and having a truly special night together 😉