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Mens Underwear and Lipstick - predictors of recessions

Recessions are a normal part of the economic cycle (unless you live in Australia which apparently deserves its 'lucky country' moniker - they haven't had a recession since 1991 - all those resources and banks...)

There are a wide number of indicators that fund managers, economists, Central Bankers look at to predict recessions, including real gross domestic product, income, employment, manufacturing, and retail sales. 

However, there are some more quirky indicators that people in the know look at.  Here are some of them and how they might indicate a recession.

Mens Underwear

This is a favourite of Alan Greenspan, but because 'the garment that is most private is male underpants, because nobody sees it except people in the locker room, and who cares? [Sales are usually stable] so on those few occasions where it dips, that means that men are so pinched that they are deciding not to replace underpants.'  The theory is that replacing mens underwear is the last thing that people will spend money on when money is tight, or people are worried about the future. There is indeed a mens underwear index which is based on the sales of undies.

Lipstick Indicator

Created by the Estee Lauder Chairman in 2001 when he noticed almost the opposite effect to the Mens Undies indicator.

Women tend to buy MORE lipstick during an economic downturn instead of more expensive items.  But, women also spend more on lipstick in boom times (but not during Covid when face masks were de riguer.

Other quirky indicators include (links included):

Skyscraper index (an increase in very tall buildings just before an economic bust)

Japanese Haircut Indicator (people spend less on haircuts when the economy is struggling)

First Date Indicator (significant increase in traffic on dating apps and websites when economy is not in good shape)



 

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