It’s Santa vs. Swift for This Year’s Economic Powerhouse Title

Between Santa Claus and Taylor Swift, who do you think brings the economy a bigger gift? While Santa holds cultural significance in many parts of the world, his gift-giving spirit is also a driving economic force for many countries. In a consumption-driven economy like the United States, Santa equals goods spending. On the other hand, Taylor Swift-driven consumption leans toward services—travel, hotels, restaurants and other concertgoing needs. The world-renowned singer has already shown her economic impact. We are now waiting to see if Santa can match or exceed Ms. Swift this year.

U.S. real gross domestic product (GDP) grew 5.2% in the third quarter of 2023. It would be a wild exaggeration to say that Swift was responsible for all of that growth. As is usually the case, the consumption account was the largest driver, contributing 2.44 percentage points, while the services subaccount contributed 1.38 percentage points. It wasn’t the most impressive contribution to growth; however, consumption has decelerated for quite some time. Swift’s Eras Tour gave a boost to what otherwise would have been a lower number. Bloomberg Economics estimated that her first 53 concerts alone added $4.3 billion to U.S. GDP. This likely didn’t account for the ripple effect that was hard to capture. Her economic contribution was also noted in the Federal Reserve Bank of Philadelphia’s “Beige Book.”

Before we move to judge Santa’s performance, let’s recognize an important fact: Change in private inventories contributed 1.40 percentage points to third-quarter growth, even more than service expenditure did. Unanticipated buildups in inventories may lead to future cutbacks in production. This means the high growth of inventories in the third quarter could signal a decline in inventories in the fourth quarter, potentially dragging down growth and partially offsetting the impact of Christmas spending. Also important to note is the “Swift hangover,” which means consumers might have already exhausted their finances to attend the concerts, leaving not much left to spend on gift-giving. 

While many world leaders such as Canadian Prime Minister Justin Trudeau have openly invited Swift to perform in their countries in the hope of an economic boost, Santa will certainly be present around the world. The question is: What is he bringing?