Moviegoers appear to have cooled it since a "Barbie" fueled summer, and this could be a worrying signal for consumer spending. According to Torsten Slok, chief economist at Apollo Global Management, the recent slowdown in the number of people going to the movies is more pronounced than the usual seasonal pattern. This trend is critical for markets as consumer services make up two-thirds of consumer spending.
A Spike Around the Release of "Barbie" Movie
The chart provided by Slok reveals a spike in attendance during the 31st week of 2023, which coincided with the release of the highly successful "Barbie" movie. Box Office Mojo reported that this film remains the hit of 2023 so far, grossing over $634 million in the U.S. The animated feature "The Super Mario Bros. Movie" came in a close second at over $574 million.
Headwinds for Consumers
As consumers face tighter credit conditions, a drop in excess savings, and restarted student debt payments, Deutsche Bank warns that these factors will continue to pose challenges. In fact, consumer credit saw the biggest drop since the pandemic in August as loan repayments started to kick in.
Overall, monitoring the slowdown in consumer spending within the services sector is crucial for market stability. The impact on box office performance serves as an indicator of broader economic trends and potential shifts in consumer behavior.
The State of Consumer Spending and the Movie Industry
Like others, experts are predicting a recession to hit the U.S. in the first quarter of 2024. However, despite this forecast, some believe that consumer spending is holding up fine.
Recent Consumer Spending Trends
In late September, it was reported that consumer spending in August had risen by 0.4%. However, it is important to note that this increase was largely due to higher gasoline prices, which put a strain on household budgets across the country. The month of July saw an even more significant jump in spending, with a record increase of 0.8%. Interestingly, during this time period, the release of movies such as "Barbie" and "Oppenheimer," as well as the highly anticipated Taylor Swift concert, seemed to have a major impact on consumer spending.
The Movie Industry's Decline
In recent weeks, there has been a noticeable decline in box office revenues. Moviegoers appear to be spending less on watching horror flicks like "The Nun 2," "The Exorcist: Believer," or the underdog tale "Dumb Money." This decrease in movie theater attendance has affected the three major cinema operators - IMAX, Cinemark, and AMC.
Out of these three operators, only AMC has experienced a significant return this year, with their stock rising by 25%. It is worth mentioning that AMC has been involved in various activities throughout 2023, extending beyond box-office revenues.
The Role of AMC
AMC not only operates as a movie theater chain but also serves as the distributor for the highly anticipated Taylor Swift tour concert movie. This movie is expected to be a massive success and could potentially help revitalize the movie industry as it premieres this weekend.
In conclusion, while consumer spending may be showing signs of strain due to rising debts, the impact of popular events like Taylor Swift's concert and successful movie releases cannot be overlooked. The state of the movie industry continues to evolve, and companies like AMC are exploring various avenues to remain resilient in an ever-changing market.