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Inflation spike in Europe is tied to the Olympics, Taylor Swift: UBS

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A general view of the Eiffel Tower with the Olympics rings pictured with national flags of competing countries from the Place du Trocadero ahead of Paris 2024 Olympic Games on July 21, 2024 in Paris, France.

Kevin Voigt | Getty Images Sport | Getty Images

The Olympic Games are causing a surge in prices, but French consumers aren’t likely to feel its pinch.

Mega events like the Olympics, or even big concerts like Taylor Swift’s Eras tour, lead to a rise in demand for hotel — rooms and airline tickets, as well as other goods and services needed by the influx of visitors. Even so, most consumers may not feel the impact, according to UBS. 

Still, the data might suggest otherwise. That’s because the method for calculating consumer price changes might pick up the spiking costs in industries associated with tourism — like hotels — and provide a distorted impression.

“The Olympic Games or a Taylor Swift concert create a sudden demand shock,” wrote Paul Donovan, chief economist at UBS Global Wealth Management, in a recent analyst note. “The measurement method for these prices is more likely to capture the unusual and transitory pattern of demand, and it is here that the increase in consumer price inflation takes place.”

Taylor Swift performs onstage during The Eras Tour at Wembley Stadium on June 21, 2024, in London.

Kevin Mazur | Getty Images

This was already seen with the Eras Tour, as it boosted hotel revenue in cities across the U.S. where Swift was performing.

This year, U.K. hotel prices increased in June, but Donovan said the higher costs “may have been borne by a select group of aficionados of Swift’s music” given that the Eras Tour came to Wembley Stadium that month.

Meanwhile, the Summer Games are causing a similar phenomenon in Paris. “The tourists flocking to Paris for the Olympics, and paying the price, are not representative of French consumers,” he wrote.

A Parisian hotel boom?

Though hotels in the City of Light struggled in the beginning of July, with an estimated 60% drop in occupancy rates that prompted hotels to discount rates, the trend during the Games has reversed. Paris hotel occupancy levels during the Olympics, which started on July 26 and run until Sunday, are up versus last year, according to global real estate data company CoStar. But in the days after the closing ceremony, Paris hotel bookings are projected to drop from a year ago.

The city’s hotel industry has also seen massive year-over-year price increases. For each day during the first full week of this year’s Games from July 28 until Aug. 3, CoStar found a 206% year-over-year growth in weekly revenue per available room. That was fueled by a 17.4 percentage point rise in occupancy to 85.4% as well as a gain in the average daily rate (ADR) of 143%.

The Paris tourist office expects an occupancy rate of 86% from Aug. 5 through Sunday.

A notable price surge has also been seen in other parts of France. In the surrounding Île-de-France region, CoStar found that ADR grew 83.4% in the week ended July 27 from a year ago. At the same time, Paris occupancy fell 5.7 percentage points year over year, while ADR jumped by 90.8%.

“Is your average French person looking to stay in Paris at the moment? No, they are absolutely not, not unless they’re insane or going to the Olympics,” he told CNBC in an interview. “Most of them are unaffected by the surge in prices.”

Olympic gains

That said, the Games are drawing huge numbers of tourists. During the first week alone, the Paris tourist office reported 1.73 million visitors in Greater Paris, an 18.9% increase from 2023.

Of these, 924,000 were international tourists — about a 14% uptick from last year — with the largest number of foreign visitors coming from the U.S. French tourists coming to the city rose 25.1% to 803,000 from last year.

In all, the tourist office has estimated a total of 15.3 million visitors for the Olympic and Paralympic Games, with 11.3 million for the former and 4 million for the latter.

Tourists take selfies in front of the Arc de Triomphe on July 07, 2023 in Paris, France. Paris will host the Summer Olympics from July 26 till August 11, 2024. 

Matthias Hangst | Getty Images Sport | Getty Images

Tourists pass near a banner with the Paris 2024 logo before the start of the Paris 2024 Olympic and Paralympic Games on June 17, 2024 in Paris, France. 

Chesnot | 

Small businesses across the city have also seen gains. Visa found that those businesses received a year-ove-year sales boost of 26% from cardholders in the Games’ first weekend.

While the long-term economic impact of the Paris Olympics is still uncertain, Donovan expects that “on balance it will probably be a positive,” citing past Games that have seen tourism booms like Barcelona in 1992. “If you get it right, it can be a boost,” he said, noting that Summer Olympics tend to garner more attraction than the Winter Olympics in general.

Paris 2024 may generate as much as $12 billion, or 11.1 billion euros, in long-term economic impact, a recent study from the Centre for Law and Economics of Sport estimated. The International Olympic Committee said the next two Summer Olympics could see even more value being created.

“What we see is that the economic impact of the Games is very substantial,” said Christophe Dubi, the Olympic Games executive director. “This is an injection of resources in the local economy that leaves a profound impact now and in the future.”

The IOC’s Agenda 2020 reforms have helped the events become more sustainable economically, according to Victor Matheson, an economist and professor at the College of the Holy Cross.

This will be the first Summer Games projected to cost under $10 billion since Sydney 2000. Money was saved by having 95% of the venues be preexisting or temporary and the strategy could mark a “turning point” for the the Olympic movement, Matheson said.

“The IOC has allowed Paris to come through with an Olympics that doesn’t build these billion-dollar monuments at the Olympics and doesn’t gold-plate everything there,” he said. “Those sorts of things that can drive up costs pretty quickly, they don’t appear to be pushing that.”

Disclosure: CNBC parent NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder to all Summer and Winter Games through 2032.

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Economics

Consumer sentiment worsens as inflation fears grow, University of Michigan survey shows

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A shopper pays with a credit card at the farmer’s market in San Francisco, California, US, on Thursday, March 27, 2025. 

Bloomberg | Bloomberg | Getty Images

The deterioration in consumer sentiment was even worse than anticipated in March as worries over inflation intensified, according to a University of Michigan survey released Friday.

The final version of the university’s closely watched Survey of Consumers showed a reading of 57.0 for the month, down 11.9% from February and 28.2% from a year ago. Economists surveyed by Dow Jones had been expecting 57.9, which was the mid-month level.

It was the third consecutive decrease and stretched across party lines and income groups, survey director Joanne Hsu said.

“Consumers continue to worry about the potential for pain amid ongoing economic policy developments,” she said.

In addition to worries about the current state of affairs, the survey’s index of consumer expectations tumbled to 52.6, down 17.8% from a month ago and 32% for the same period in 2024.

Inflation fears drove much of the downturn. Respondents expect inflation a year from now to run at a 5% rate, up 0.1 percentage point from the mid-month reading and a 0.7 percentage point acceleration from February. At the five-year horizon, the outlook now is for 4.1%, the first time the survey has had a reading above 4% since February 1993.

Economists worry that President Donald Trump’s tariff plans will spur more inflation, possibly curtailing the Federal Reserve from further interest rate cuts.

The report came the same day that the Commerce Department said the core inflation rate increased to 2.8% in February, after a 0.4% monthly gain that was the biggest move since January 2024.

The latest results also reflect worries over the labor market, with the level of consumers expecting the unemployment rate to rise at the highest level since 2009.

Stocks took a hit after the university’s survey was released, with the Dow Jones Industrial Average trading more than 500 points lower.

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Economics

PCE inflation February 2025:

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Core inflation in February hits 2.8%, hotter than expected; spending increases 0.4%

The Federal Reserve’s key inflation measure rose more than expected in February while consumer spending also posted a smaller than projected increase, the Commerce Department reported Friday.

The core personal consumption expenditures price index showed a 0.4% increase for the month, putting the 12-month inflation rate at 2.8%. Economists surveyed by Dow Jones had been looking for respective numbers of 0.3% and and 2.7%.

Core inflation excludes volatile food and energy prices and is generally considered a better indicator of long-term inflation trends.

In the all-items measure, the price index rose 0.3% on the month and 2.5% from a year ago, both in line with forecasts.

At the same time, the Bureau of Economic Analysis report showed that consumer spending accelerated 0.4% for the month, below the 0.5% forecast. That came as personal income posted a 0.8% rise, against the estimate for 0.4%.

Stock market futures moved lower following the release as did Treasury yields.

Federal Reserve officials focus on the PCE inflation reading as they consider it a broader measure that also adjusts for changes in consumer behavior and places less of an emphasis on housing than the Labor Department’s consumer price index. Shelter costs have been one of the stickier elements of inflation and rose 0.3% in the PCE measure.

“It looks like a ‘wait-and-see’ Fed still has more waiting to do,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Today’s higher-than-expected inflation reading wasn’t exceptionally hot, but it isn’t going to speed up the Fed’s timeline for cutting interest rates, especially given the uncertainty surrounding tariffs.”

Good prices increased 0.2%, led by recreational goods and vehicles, which increased 0.5%. Gasoline offset some of the increase, with the category falling by 0.8%. Services prices were up 0.4%.

The report comes with markets on edge that President Donald Trump’s tariff intentions will aggravate inflation at a time when the data was making slow but steady progress back to the Fed’s 2% goal.

After cutting rates a full percentage point in 2024, the central bank has been on hold this year, with officials of late expressing concern over the impact the import duties will have on prices. Economists tends to consider tariffs as one-off events that don’t feed through to longer-lasting inflation pressures, but the encompassing scope of Trump’s tariffs and the potential for an aggressive global trade war are changing the stakes.

Correction: Consumer spending increased 0.4% in February. An earlier headline misstated the number.

This is breaking news. Please refresh for updates.

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Economics

Young Americans are losing confidence in economy, and it shows online

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For economists, harbingers of a recession can include a slowdown in consumer spending and rising unemployment.

For the chronically online, indicators can range from the perceived fall of fake eyelashes to more commercials for online colleges. Or, maybe, it’s a skin care company selling eggs.

And for Sydney Brams, a Miami-based influencer and realtor, it’s a decline in prices on clothing resale platform Depop.

“I was literally running to my parents and my boyfriend, and I’m like, ‘Look at this. Look, something is very wrong,'” Brams told CNBC after seeing some Depop sellers “come back to Earth,” as she described it. “I feel like Chicken Little.”

Making a joke of so-called recession indicators in everyday life has gained traction in recent weeks as the stock market pullback and weak economic data raised anxiety around the health of the economy. This trend also underscores the uniquely sharp sense of financial dissatisfaction among America’s young adults.

Read more CNBC analysis on culture and the economy

Many of today’s young adults experienced childhood during the Great Recession and came of age as the pandemic threw everything from in-person work to global supply chains out of orbit. Now, they’re concerned about what’s been deemed a white-collar job market slowdown and President Donald Trump’s on-again-off-again tariff policies — the latter of which has battered financial markets in recent weeks.

To be clear, when they share their favorite recession indicators, they’re kidding — but they don’t see the future path of the U.S. economy as a laughing matter.

“It’s gallows humor,” said James Cohen, a digital culture expert and assistant professor of media studies at Queens College in New York. “This is very much a coping mechanism.”

These omens can be found across popular social media platforms such as X, TikTok and Instagram. Some users see cultural preludes to a recession in, say, Lady Gaga releasing her latest album or the quality of the new season of HBO’s “The White Lotus.” Others chalk up social trends such as learning to play the harmonica or wearing more brown clothing as forewarnings of a financial downturn on the horizon.

Social media users Sydney Michelle (@sydneybmichelle), left; Celeste in DC (@celesteiacevedo), and Sulisa (@ssclosefriendstory) share their personal “recession indicators” on TikTok.

Courtesy: Sydney Michelle | Celeste in DC | Sulisa | via TikTok

Just last week, several social media users saw a slam-dunk opportunity to employ variations of the joke when DoorDash announced a partnership with Klarna for users to finance food delivery orders. A spokesperson for Klarna acknowledged to NBC News that people needing to pay for meals on credit is “a bad indicator for society.”

Some content creators have made the humor an entry point to share budget-friendly alternatives for everyday luxuries that may have to go if wallets are stretched.

“We are heading into a recession. You need to learn how to do your nails at home,” TikTok user Celeste in DC (@celesteiacevedo) said in a video explaining how to use press-on nail kits as opposed to splurging at a salon.

Declining confidence

These jokes don’t exist in a vacuum. Closely followed data illustrates how this trend reflects a growing malaise among young people when it comes to the economy.

At the start of 2024, 18-to-34-year-olds had the highest consumer sentiment reading of any age group tracked by the University of Michigan. The index of this group’s attitude toward the economy has since declined more than 6%, despite the other age cohorts’ ticking higher.

This switch is particularly notable given that young people have historically had stronger readings than their older counterparts, according to Joanne Hsu, director of the Surveys of Consumers at Michigan.

A typically cheerier outlook can be explained by younger people being less likely to have additional financial responsibilities, such as children, Hsu said. But she added that this age bracket is likely grappling with rising housing costs and debt right now, while also feeling uncertainty tied to economic policy under the new White House.

“I have a suspicion that young people are starting to feel like — or have been feeling like — many markers of the American dream are much more difficult to reach now,” Hsu said.

Young people are also less likely to have assets such as property or investments that can buoy financial spirits when the economy flashes warning signs, according to Camelia Kuhnen, a finance professor at the University of North Carolina.

The potential for a recession, which is broadly defined as at least two consecutive quarters of the national economy contracting, has been on the minds of both Wall Street and Main Street. A Deutsche Bank survey conducted March 17-20 found the average global market strategist saw a nearly 43% chance of a recession over the next 12 months.

An index of consumer expectations for the future released Tuesday by the Conference Board slid to its lowest level in 12 years, falling well below the threshold that signals a recession ahead. Meanwhile, Google searches in March for the word “recession” hit highs not seen since 2022.

This onslaught of news comes after Treasury Secretary Scott Bessent said on March 16 that there were “no guarantees” the U.S. would avoid a recession. Bessent said a “detox” period is needed for the national economy, which he and other Trump administration officials have argued is too reliant on government spending.

‘The vibes are off’

Though the recession humor has had a yearslong history online, it’s gained momentum in recent weeks as the state of the economy has become a more common talking point, according to Cohen, the Queens College professor. While a recession indicator entry was added to the digital culture encyclopedia Know Your Meme only this month, the jokes have tracked back to at least 2019.

“Especially with Gen Z, there’s a lot of jokes with never being in a stable economic environment,” said Max Rosenzweig, a 24-year-old user experience researcher whose personal recession indicator was the number of people he’s seen wearing berets. “It’s funny, but it’s like, we’re making light of something that is scary.”

Cohen said he heard from Gen Z students that this type of humor helped them realize others are experiencing the same uncertainty. These students may not feel control over the country’s economic standing, he said, but they can at least find community and levity in a precarious moment.

Cohen sees the recent surge of this humor as a sort of “barometer” for what he calls the vibes around the economy. His conclusion: “The vibes are off.”

Brams sees a similar story playing out in South Florida and on social media. “I’m not going to lie, it just feels really grim,” the 26-year-old said.

But, “it’s not anything that me or my friend or my boyfriend or my parents can really do anything about,” she said. “There’s no choice but to just stay in your lane, try to keep your job, try to find joy where you can and just stay afloat.”

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