As murmurs of a recession begin to circulate, there are intriguing yet unconventional indicators to consider. Beyond traditional metrics like the stock market, these quirky signals offer a glimpse into consumer behaviour. From snacks to lipstick, here are nine peculiar recession indicators that could suggest economic uncertainty.
Snack Index: Traditionally, snack purchasing decreases when economic stability wavers. Recent reports from General Mills revealed a 5% drop in net sales, reflecting consumers’ diminishing confidence in the economy, affecting snack consumption for both humans and pets.
Mini Alcohol Bottle Indicator: During tight financial times, buyers may opt for smaller, less expensive alcohol options, such as miniatures often seen on flights. Notably, Brown-Forman observed an uptick in sales of these convenient sizes, signifying a pinch in consumer wallets.
Lipstick Index: Rooted in the observations of Leonard Lauder, this index suggests that lipstick sales thrive in downturns, as they provide a small indulgence. While lipstick sales soared during both the 2001 and 2008 recessions, the reliability of this indicator remains questionable as cosmetics can flourish regardless of economic conditions.
Underwear Index: Spearheaded by former Fed chair Alan Greenspan, the premise posits that men defer purchasing underwear during economic hardship. Data showed a decline in men’s underwear sales during the Great Recession mirrored by a resurgence as the economy improved—a potentially noticeable trend in disposable income behaviour.
Hemline Index: This age-old theory suggests skirts lengthen during downturns. Historical contexts showcase trends like the miniskirt’s rise in prosperous times, followed by a drop during economic struggle, although its predictive power is more anecdotal than definitive.
Cardboard Box Indicator: Cardboard demand offers a tangible gauge of economic health, as it signifies the volume of goods moving through retail and e-commerce. A notable 8.4% dip in shipments late 2022 mirrored similar declines during previous downturns, indicating possible drops in consumer spending.
Diaper Rash Indicator: A rise in diaper rash ointment sales may hint at tightening family finances. Parents may cut back on diaper purchases, leading to increased need for ointments—an indicator of economic distress, albeit offset by factors like declining birth rates.
Champagne Index: Conversely to the lipstick index, this theory suggests a decline in Champagne sales during economic downturns. With sales plummeting from 23 million bottles pre-recession to a mere 12.5 million in 2009, it underscores celebratory spending trends during hard times.
Stripper Index: According to Aaliyah Kissick, a Gen Z money expert, the patterns of tipping in the service industry, notably among exotic dancers, can serve as precursors to economic downturns. Reduced discretionary spending reflects the broader economic climate, linking it back to job security and inflation worries.
As concerns of a recession loom, unconventional indicators emerge, suggesting economic shifts. From snack purchases declining to the rise in mini alcohol bottles, these indicators—like lipstick and diaper rash trends—help depict consumer sentiment and behaviours often overlooked in traditional economic analyses. Nine such indicators are explored.
These nine eclectic indicators posit that recession signs may exist beyond traditional economic measures. While not foolproof, observing fluctuations in these quirky domains—ranging from lipstick sales to the consumption of cardboard—can provide a broader understanding of impending economic shifts. As we watch these unusual markers, one thing remains clear: consumer sentiment holds the key to interpreting the economy’s ebbs and flows.
Original Source: www.businessinsider.com
