Forget about inflation. "Funflation" has been the theme this summer. In a new note, Bank of America lays out the pillars behind whats driving this economic force: A shift towards services spending, a healthier pricing power, a positive supply and demand trends, live events as a disruption-proof business, and sponsorship and advent experiential marketing. All of these are backed by a new wave of digital influence and yearning for live experiences that come out of pandemic era lockdowns. Yahoo Finance Live discusses the note and the shift in spending.
ALEXANDRA CANAL: We were talking about a lot of inflation today, but what about funinflation. So there you go. There's that fun element in there. That is what Bank of America says is driving the economy as we've seen this surge of live events, and there are five main pillars here that are really driving this right now. Number one is being the shift towards services spending, really the rise of the experience economy that we've seen.
Number two, we have a healthier pricing power going on now. Third is positive supply and demand trends, especially as social media and TikTok are kind of keeping that awareness alive for those bigger artists. Number four is that live is a relatively disruption proof business, so it's really hard to replicate a live event in a virtual setting. And then finally, the sponsorship and advent of experiential marketing here. So, of course, there are some risks moving forward, especially if we see a consumer slowdown, but for now funflation seems to be alive and well.
JOSH SCHAEFFER: I mean, just try and buy a ticket to an NFL game, right?
ALEXANDRA CANAL: Yeah.
JOSH SCHAEFFER: The prices haven't come down at all. I feel like we've talked a lot over the last two years of, people are paying so much for these sporting events, people are paying so much for these Taylor Swift tickets. How long are you going to do that for? Well, we're, I guess, probably two years post-pandemic economy at this point as far as people going back to live events. I haven't found anything to be cheaper at all. It seems like we've sort of found a new sustained level of live ticket prices, where things are just simply more expensive. If you want to go to MetLife stadium and watch the Aaron Rodgers-less Jets or Giants team play--
PRAS SUBRAMANIAN: It's too soon.
JOSH SCHAEFFER: Too soon. Or Giants team play, but you're paying at least 200 bucks to get in the stadium on the secondary market. It's impressive.
PRAS SUBRAMANIAN: I think that fourth point is huge, right? Live is relatively disruption-proof. It has a big-- basically, in economics terms, like, a big moat, right? Like, you can't you cannot substitute live for watching something on TV, especially for music and concerts. Like, you want to be there. And you mentioned the TikTok factor. How much of this is driven by the fact that I want to say that I was there? I want to show that I was at the Taylor Swift concert?
ALEXANDRA CANAL: Post a picture.
PRAS SUBRAMANIAN: I want to say--
JOSH SCHAEFFER: Trying to get that original TikTok content, bro.
PRAS SUBRAMANIAN: I want to-- I want to show my sad face when the Rodgers blew his Achilles tendon. So these are the things that we're talking about, like the effect that we're talking about. But I think it's all like this whole, like, hype, and we want to be there. We want to talk about it. We want to be-- this being there is huge. People will pay up for that, and they don't want to not be there.
ALEXANDRA CANAL: Yeah, and we were just showing some tickers there. Like, Endeavor, for example, that can stand to move.
PRAS SUBRAMANIAN: The WWE move.
ALEXANDRA CANAL: Yeah, WWE move. I mean, there's a lot that these companies can gain from this funflation environment.