How Influencers Hijacked The Consumer Economy

**Ed Elson** (0:00)
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**Ed Elson** (1:54)
Welcome to Prof G Markets. I'm Ed Elson. It is June 10th. Let's check in on yesterday's market vitals.
The S&P 500 and the NASDAQ fell, with tech and semiconductor stocks leading the declines. News that Iran shot down a US helicopter added to the selling pressure. Oil declined earlier in the day, but rose again as President Trump said the US would respond to the attack. And finally, Apple shares slid nearly 4% on day two of its developers conference as investors remained unimpressed by its AI vision. By the way, that was its worst day since February.
Okay, what else is happening? There's a lot happening in the markets this week, with the biggest IPO in history coming on Friday. We will be covering all of it throughout the week. But today, we wanted to take a break from the AI news cycle and discuss something a little bit different, and that is the influencer economy. If you walk around New York City long enough, you'll notice something strange right now, and that is a lot of people standing in a lot of lines. 60% of Gen Z say they have waited for more than 30 minutes in a line for a specific food in the past year after seeing it on social media. For instance, people start lining up at 6am for a dot cake, which is an $11 cup of cake that just went viral on TikTok. But it's not just food. More than 80% of Gen Z discover new music through social media and user-generated content. Marketing companies like Chaotic Good Projects create networks of TikTok accounts engineered to push artists into recommendation algorithms. They call this the process of trend simulation. What they've really mastered, though, is the science of going viral. All of this raises an important question, which we will answer in this conversation, and that is, do influences run the consumer economy right now?
Joining us to answer that question, we're speaking with Rachel Karten, author of the Lincoln Bio Newsletter, and also Allison Schrager, senior fellow at the Manhattan Institute and columnist for Bloomberg, who just wrote about the influencer economy. Rachel, Allison, thank you for joining me on Prof G Markets. Allison, I'm gonna start with you because you just wrote this article. The article is titled, quote, the influencer economy has crossed the line. I gave a little bit of an intro as to like what these lines are, but if you could kind of explain to us what are we seeing right now, what are these lines that everyone's seeing on the blocks in New York City and in other cities as well.

**Allison Schrager** (4:29)
In the article, I'm actually quite bullish on it. I call it a manifestation of capitalism on display, technological innovation on display. And what we're seeing is a lot of people hear about a good or service, usually a good like frozen yogurt on Instagram, on TikTok. They want to try it themselves and then film it for themselves, for their network, either to try to grow their audience or just to impress their friends, that they've tried this good. And you create a lot of hype. I mean, I think the cliche in New York is now becoming people used to wait in line for nightclubs. Now they wait in line for bagels.