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Thursday, June 20, 2024

Is a Recession Approaching? Economists Suggest Observing Women’s Lipstick Trends

The question of whether a recession is coming can be approached from various angles, including traditional economic indicators and more unconventional ones like the “lipstick index.”

Traditional Economic Indicators

  1. Economic Growth and Inflation: The economic outlook for 2024 suggests a slowdown rather than a full-blown recession. Experts predict a deceleration in business activity, with moderate inflation and steady employment growth, indicating a “soft landing” scenario rather than a recession. The unemployment rate has remained relatively stable, and inflation has decreased significantly from its peak.
  2. Federal Reserve Policies: The Federal Reserve’s actions, such as maintaining high interest rates to combat inflation, are expected to continue influencing the economy. While high interest rates have slowed economic growth, they are not expected to lead to a recession unless there is a significant negative shock to the global economy.
  3. Stock Market Predictions: Some financial forecasters predict a potential stock market crash and recession due to weakening labor markets and high stock valuations. However, opinions are divided, with some experts maintaining a bullish outlook on the economy.

Unconventional Economic Indicators

  1. Lipstick Index: The “lipstick index” suggests that during economic downturns, women tend to buy more lipstick as a small luxury to boost their morale. This trend was observed during the post-September 11 recession and the Great Depression.┬áRecent data indicates a resurgence in beauty sales, with prestige beauty products outpacing mass-market sales, suggesting that consumers are still indulging in small luxuries despite economic uncertainties.
  2. Other Consumer-Based Indicators: Additional unconventional indicators include men’s underwear sales, champagne sales, and dining-out habits. For instance, men’s underwear sales tend to decline during recessions, while champagne sales drop as people cut back on luxury items. These indicators provide insights into consumer behavior and economic sentiment.

Conclusion

While traditional economic indicators suggest a slowdown rather than a recession, unconventional indicators like the lipstick index provide additional context on consumer behavior during uncertain economic times. The overall consensus among experts is that a recession is not imminent, but the economy is expected to decelerate, with some risks remaining.

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