The current economic situation in the US is unique. The unemployment rate is at an all-time low of 3.4%, but interest rates are higher than they’ve been in decades. GDP grew 2.5% last year, but economists expect slower growth this year. Everyone is talking about the recession. Don’t even get started on the housing market.
In such unpredictable times, experts tend to look beyond the traditional economic indicators like GDP, job numbers, and manufacturing activity and search for hidden signals that could hint at a downturn. In this case, your pants.
People’s private behaviors often change unconsciously as a recession approaches, and tracking these changes reveals leading indicators of a broader economic slowdown.
One of the most famous hidden signals is the “lipstick effect“, a theory first proposed by economist Juliet Schor in 1998. She found that during an economic downturn, women tend to buy more lipstick and cut back on more expensive luxury products, as they seek affordable luxury or “hope in a bottle”. The theory gained popularity in 2001 when Leonard Lauder, the chairman of Estée Lauder, reported a rise in lipstick sales during the post-9/11 recession.
Another unconventional indicator is men’s underwear, according to former federal reserve chair Alan Greenspan. He believed that during tough economic times, people would wait longer to replace worn-out items, and men might hold out the longest when it comes to their underwear.
You might be interested to know that this theory was supported by industry research that showed a slump in the men’s underwear market in 2022 and a drop in the stock of Hanesbrands, a men’s briefs manufacturer. Who knew?
Online dating apps could also be a contemporary indicator of a recession, as they tend to perform well during tough times. People stay at home more during recessions, and online dating offers a convenient way to connect with others.
The trend is evident in the latest data from Match Group, which owns Tinder and Hinge, which reported a 2% increase in paying subscribers and a 7% increase for Tinder alone in November 2022.
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