Disney Theme Parks as a Proxy for the Middle Class

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The ability to afford theme park visits is a good proxy for the financial health of the middle class. The parks that Walt Disney (NYSE: DIS) runs require the visitor to pay for airline tickets and  mid-tier hotels and to have hundreds of dollars to enter the establishments, eat and drink for a day or more.

Disney’s earnings rose 24% in the most recently reported quarter to $2.52 per share. The entertainment company credited an increase in pay TV revenue and improved results at its parks. Parks and resorts revenue rose 11% in during the quarter to $3.1 billion. Operating income for the division was higher by 33% to $421 million.

Management’s comment about the results was that “Higher operating income at our domestic parks and resorts was driven by increased guest spending and, to a lesser extent, attendance, partially offset by increased costs. Increased guest spending reflected higher average ticket prices, daily hotel room rates and food, beverage and merchandise spending.”

Increasingly, economists say that Americans believe the U.S. economy never exited that recession. Americans, they say, can barely afford the $3.50 per gallon gas that they need to put in their cars to get to work, school or the store. The situation might not be that dire if so many consumers can afford to go to Disneyland.

Douglas A. McIntyre