Nov 15, 2022 - News

What lipstick says about our economy

Animated illustration of a tube of lipstick rolling up to reveal a hundred dollar bill.

Illustration: Aïda Amer/Axios

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.

  • 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.

  • "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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