Business

How lipstick and underwear can predict the economy

On Wednesday, the Census Bureau reported that retail sales were flat in July, showing that inflation is affecting American spending.

Consumer spending drives more than two-thirds of GDP, offering important insight into the state of the economy and the likelihood of a recession.

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Here are some less-intuitive markers, from lipstick sales to swipes on dating apps, that might qualify as economic tea leaves:

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A Dior cosmetics display in Miami.

Jeffrey Greenberg/Universal Images Group/Getty Images

Jeffrey Greenberg/Universal Images Group/Getty Images

Lipstick

The theory was born during the 2001 recession, when Estée Lauder heir and chairman Leonard Lauder noticed that lipstick sales had still managed to climb. The same was true even from 1929 to 1933, during the Great Depression.

The phenomenon known as the “lipstick index,” in which purchases of cosmetics are inversely correlated with the health of the economy, remains true today.

According to Natalia Bambiza, an analyst for NPD, sales for lip makeup spiked 48 percent in the first quarter of 2022 year over year.

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Shoppers scramble for sale bargains in the men's underwear section in 1953.

Ron Case/Getty Images

Ron Case/Getty Images

Men’s underwear

In 2008, as the nation spiraled into the Great Recession, the head of the Federal Reserve at the time pointed to one product seen as a good economic omen: men’s underwear.

Alan Greenspan told an NPR reporter that men tend to forgo buying new underpants during a recession because it’s less obvious to others when it’s time for a new pair.

“You need clothes on the outside,” the reporter recalled Greenspan saying.

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A couple kiss at sunset on Rehoboth Beach in Delaware.

Sarah L. Voisin/The Washington Post

Sarah L. Voisin/The Washington Post

Romance

As the markets fell in 2009, the website Match.com posted its strongest fourth-quarter earnings in seven years. During the pandemic, Bumble and Tinder both soared as singles flocked to the apps while they were stuck at home.

“People still need love and relationships in recession — and you can argue they need it more,” Lauren Schenk, an analyst at Morgan Stanley, said on a podcast.

Sarah L. Voisin/The Washington Post

Boxes of Kraft macaroni and cheese for sale in San Francisco.

Bloomberg News

Bloomberg News

Frozen pizza and mac and cheese

When money is tight and eating out is not an option, consumers tend to be strategic about how they spend in grocery stores. They often skip the fresh-food aisles and go straight to the freezer section.

Kraft saw sales rise in 2009 as more people bought DiGiorno and opted for boxed macaroni and cheese. A similar trend is happening now — inflation is driving consumers to store-brand items to shave off a few dollars.

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Bottles of sparkling wine are seen on display at a Costco store in December 2008 in San Francisco.

Justin Sullivan/Getty Images

Justin Sullivan/Getty Images

Champagne

When money is tight and layoffs are prolific, consumers generally aren’t in the mood to pop a bottle of Dom Pérignon. In a 2011 survey, NPR’s Planet Money found that economic indicators derived from sales of the French beverage in the United States were 90 percent accurate.

Sales went up in 1999 during the internet bubble and again in 2007 during the housing bubble, and most recently in 2021.

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Three young women apply lipstick in 1945.

Hulton Archive/Getty Images

Hulton Archive/Getty Images

Obviously, there are more substantive predictors of a recession, such as unemployment, spending and wage data. And the U.S. economy already has contracted in two consecutive quarters, another typical sign.

That said, maybe think twice before buying that lipstick.

Hulton Archive/Getty Images

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Credits

Photo editing by Haley Hamblin. Editing and Production by Karly Domb Sadof.