What lipstick says about our economy
For decades, investors and others have looked for economic clues in less obvious places such as the length of women's hemlines and the sale of lipstick.
- The idea is that lipstick sales remain resilient during downtimes because people want to treat themselves to small, less costly indulgences.
- But the truth of that adage may be fading.
Driving the news: High inflation, rising interest rates, tech layoffs, the ongoing Russia-Ukraine war and dire warnings from business leaders like Jeff Bezos are fueling fears of recession. But this time those concerns are not leading to a boom in impulse buys, according to Bloomberg.
- Nervous and jittery consumers are making fewer purchases on a whim this year, according to McKinsey & Company.
- In the U.S, there was a 2.1% drop in sales of face care items in the 12 months leading up to Oct. 1 compared to a year earlier, NielsenIQ reports.
The intrigue: But even with the waning of the so-called lipstick effect, the hemline index may still hold true. The "hemline index" was posited in the 1920s by a Wharton Business School economist who noted that skirts became shorter when markets were up and longer in downturns.
- Longer skirts and looser, baggier pants are making a comeback this year, according to The Gauntlet.
- "It is not so much that longer hemlines signal economic downturn," author Nazeefa Ahmed wrote. "Rather, longer hemlines signal society’s reaction to bad news. We require security, a sense of comfort, and find this with looser, more conservative styles."
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