Investing Blog

I don’t think anything shines as bright as the movie theater as a perfect example of the amount of disposable income in the hands of people. The audiences are largely made up of young adults who earn less than older movie-goers but have less financial responsibilities thus rarely cut back on their spending when the economy slows. Older viewers are more likely to cut back on their entertainment expenses and likely put less money in the hands of their children to go see the new hot thriller.

I’m interested in watching trends like these because they truly are good economic indicators. The largest group of attendees at a theatre are people who get their disposable income from someone else, usually parents or grandparents who feel the economic crunch more than any other group of people. Now that we’ve established both the demographics and the economic background of moviegoers, lets look at the current year data.

Since the start of the calendar year, domestic movie revenue is down 4 percent. While this number seems small, it represents a large average difference year to year. Revenue includes other factors outside the realm of attendance, lower popcorn revenues or drink sales could drop sales. Though what is important is attendance which is down a staggering 7 percent year over year. People just aren’t spending like they used to, no more HELOC cash advances and gas is now $4 a gallon. I think we’re beginning to see a society cut back on its expenditures.

Entertainment budgets are the quickest to be cut. As the amount of expendable income (and expendable credit lines) drop, people spend less on their own entertainment to maintain the necessities. I’m going to follow the numbers from here on with movie attendance and revenue, so far the “movie economic indicator” is calling recession.