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Yellow Brick Road: Expect Delays
The jury’s still out on how the shrinking dollar and collapsing stock market will affect the music industry but there is one indicator that spells trouble: a promoter recently gave a straight answer as to why he canceled a show.
Promoter Felix Cabrera canceled a Nov. 1 show at New York’s
Cabrera pulled the plug because of – get this – lack of ticket sales, blaming the economy. He paid the $75,000 advance rather than take a hit as high as $400,000 if he went through with the show. (Initial reports incorrectly had Cabrera canceling an Oct. 31 Luis Miguel concert. Miguel, one of the top stars of Latin America, is promoted by Live Nation and is still scheduled to play on October 31 at Madison Square Garden..)
It’s a sign of the times. The International Monetary Fund, which projects the global economy, predicts the U.S. is heading toward recession – traditionally defined as two quarters without growth. The economy grew 2 percent last year and is expected to grow 1.6 percent this year. However, things would nearly grind to a halt in 2009, with a predicted growth of 0.1 percent – the worst showing since 1991 when the U.S. was pulling out of a recession.
“The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s,” the IMF said in its World Economic Outlook report, released Oct. 8 – amid a week where the Dow Industrial Average dropped an astonishing 2,400 points.
The outlook of Paul Craig Roberts – the main engineer of Reaganomics – is even gloomier. According to Roberts, the measures determining inflation, unemployment and GDP were different prior to the Clinton administration. Applying those traditional numbers, as crunched by statistician John Williams, U.S. unemployment is currently 13.2 percent and real U.S. GDP growth in the 21st century has been negative.
“We’re not competing for people’s entertainment dollars anymore,” Brett Yormark, CEO of the New Jersey Nets, told the Wall Street Journal. “We’re going up against milk and orange juice.”
To wit, the National Basketball Association is eliminating about 80 jobs in the U.S., the first major American sports league to announce layoffs because of the worldwide economic turmoil.
Is there any good news?
For one thing, a “worldwide” downturn is relative. Overseas markets are fairly healthy and, unlike the debt-soaked and tremendously devalued dollar, the Euro is just one of many currencies that remains solvent.
Europe didn’t do so hot this year but, compared to the U.S., looks like a winner. Germany’s growth will slow to 1.8 percent this year, down from 2.5 percent last year, the IMF predicts. France’s growth will weaken to just 0.8 percent, compared with 2.2 percent in 2007. Britain will see growth taper to 1 percent, down from 3 percent.
Japan is predicted to take a significant dip from 2.1 percent to 0.7 percent. However, global powerhouses China and India will have growth of 9.7 percent and 7.9 percent respectively, although down from the eye-catching performances of 2007. Even Russia should see a brisk 7 percent growth this year, according to the IMF, and Brazil’s booming economy will cool to 5.2 percent while Mexico’s will slow to 2.1 percent.
Stateside, there is a spot of good news: When purse strings tighten, people go to the fair. Some fairs reported record crowds this year. The Tulsa State Fair reported a 9 percent increase in gate admission, according to the Oklahoman. The Oklahoma State Fair had a reported 6 percent dip in attendance but carnival and parking grosses went up along with a dramatic attendance rise in livestock and horse shows.
The Iowa State Fair estimates it had the largest crowd in its 154-year history, according to the Oklahoman. The Wisconsin, Washington and Minnesota state fairs also reported increases in attendance, some substantially.
Finally, amid all the foreclosures, layoffs and disappearing bees, there is anecdotal evidence people will still go to high-dollar concerts. Hershey, Pa.’s
“We do watch our dollars, but why are we living life if not to enjoy some of it?” a concertgoer told the reporter.
However, “We have a son who is going through his advanced education, so that’s a chunk of change. If we had bought the tickets after the stock market fell, we might have changed our minds.”