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Can Underwear and Lipstick Industry Predict Global Economy Growth?

On November 23, 2022, the Census Bureau reported that retail sales were flat in July 2022. The report shows that inflation is affecting US spending. Consumer spending drives over two-thirds of the US GDP, and offers some important insight into the state of the economy and the likelihood of a recession.

There are several less-intuitive producers, from lipstick sales to dating apps, and the underwear industry.

In 2008, as the United States spiralled, into Recession, and at the time the head of Federal Reserve pointed to one product, which is seen as a good economic omen known as men’s underwear. According to Alan Greenspan, the men’s underwear index shows that the budget is tight, men tend to forgo purchasing new underwear during a recession because it is less obvious to others when the time for purchasing new pairs comes, and people need clothes on the outside.

The lipstick theory was launched during the 2001 recession, when Estee Lauder chairman Leonard Lauder noticed that lipstick sales still managed to grow during the recession. The phenomenon known as lipstick index, in which the purchases of cosmetics have been inversely correlated with the economies of countries. When money is tight for other products, most women purchase lipstick to get a luxury fix.

According to NPD analyst Natalia Bambiza, the sales of lipstick increased by 48 percent in the first quarter of 2022 year-on-year. Lipstick is a product that almost all women in the world would purchase, and this can contribute to the economy during a recession.