Authors note: This is one in a series of blog posts related to business reporting class assignments. While interesting (I hope!) they will likely not have much to do with municipal finance.
Starbuck lattes. The new best selling book. Movie tickets.
Deciding where to spend extra cash has become especially difficult for consumers in today’s gloomy financial climate, with the national unemployment rate near record highs and consumer confidence near recession lows, economist Ken Goldstein said last week.
“We’ll pay the rent, the car, but almost anything else we’re going to put on hold,”
Goldstein, of the New York-based economic think tank The Conference Board, said in a briefing to New York University students last week, adding that consumers are instead opting to save any extra money.
But even as shoppers cut back on discretionary spending, box office revenues continue to stay strong, with revenues up by more than 10% last year compared to 2008.
So do the economists have it all wrong? Are Americans actually more positive than the consumer confidence surveys suggest?
That’s because movie attendance can serve as an inverse economic indicator. Whether seeking cheap entertainment or an escape from their financial woes, consumers are just as or even more likely to head to their nearest theater during bad financial times.
Box office revenues stayed strong during the Great Depression, similar to their
performance today, said Syracuse University professor and pop culture expert Robert Thompson.
“When you’ve got large numbers of people who are not going on trips to Disney World and are not going on cruises and are not doing all the things they did in better times, it doesn’t mean they are simply going to crawl into a hole and curl into a fetal position,” he said. “They still want entertainment.”
U.S. box offices raked in $10.5 billion in gross revenues last year, up from $9.6 billion in 2008, according to box office tracking website Box Office Mojo.
And while revenues for 2011 are slightly below where they were during the same time last year, box office analyst Jeff Bock said a strong slate of fall movies could change that.
“We may see 2011 sell even more tickets than last year,” said Bock, of Los Angeles-based entertainment research firm Exhibitor Relations Co.
The increased revenues come even as ticket prices continue to rise, with an average ticketprice of $7.90 last year, up several dollars from 2010, according to statistics compiled by the National Association
And in larger cities, like New York or Los Angeles, an evening showing can cost $15 or more.
Still, compared to a $60 dollar ticket to a concert, live theater or sporting event, a trip to the cinema is an easier choice when times are tight, Bock said, adding that escapism is also at play.
“For two hours you can sit in a dark movie theatre and forget all your troubles,” he said. “It’s a very safe way to go and escape from all your worries for a few hours.”