How To Tell If We’re In A Recession

And other dubious lessons from the past

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Are we headed for a recession? Depending who you ask, the answer’s either definitely yes, hopefully not or, we’re already in one.

The National Bureau of Economic Research (the group responsible for answering that question) says we’re not. Yet. At least not according to their “official” predictors, which include unemployment rates and spending habits. 

But those aren’t the only methods economists have used to predict economic downturns.

You’re wearing those… again? 

Alan Greenspan came up with the idea that men’s underwear sales could signal a recession, back when the former Fed chair was just a consultant. His thinking? Sales of gitch dip when guys have less money for “unnecessary” expenses.

Popping bottles, popping economy

Champagne sales pop when the economy’s up. And, more drinking at home — even the premium stuff — signals some belt-tightening.

If you trust this indicator, good news, because bubbly’s popping off lately. Cheers!

Short skirts and skinny ties

The “hemline index” was first introduced during the Great Depression: shorter skirts = stronger economy. Ties supposedly get skinnier during lean times, too.

Neither was an especially good indicator then, and they’re even worse now, since skirts and ties have been eclipsed by sweats and hoodies, thanks to hybrid offices and WFH.

From your lips to the economy’s ears

Coined by Leonard Lauder (Chairman Emeritus of Estée Lauder), the “lipstick index” says we’re more likely to treat ourselves to small luxuries when times are tough.

Reports of the index’s death have been greatly exaggerated. Allegedly debunked in 2009, when lipstick sales declined by 10%, Covid masking mandates were thought to have killed it for good.

But this index has the staying power of a Revlon red! According to one market research group, lip makeup revenues climbed 48% year-over-year in the first quarter of 2022.

Now, it’s the fastest growing makeup category of 2022!

Watch out for goths as well: the darker the nail polish, apparently, the darker the economic outlook.

Market crash to diaper rash

The theory: parents looking to save cash, change their kids’ diapers less, leading to rising rash cream sales.

All butts, no glory.

Less green, more green thumb

The Great Recession saw a rise in gardening from people hoping to save on grocery bills. (Coupon use is another popular signal.) Just remember to wear long sleeves while you’re elbow deep in the dirt… Mosquito bites increased in ‘08 as the bloodsuckers moved into recently foreclosed homes

The macro takeaway? If you squint hard enough, you can see recession signs everywhere, right next to the signs that the economy is on the ups.

Our takeaway? There’s opportunity everywhere, no matter what economic cycle we appear to be in. So, keep your eyes trained on THAT.