When it comes to the economy, most of us are familiar with the standard indicators used to determine when an upswing is occurring: increasing GDP, booming housing and stock markets, rising consumer confidence, and jobs, jobs, jobs.
But these are not the only gauges that economists have used to measure economic ups and downs. And because Spring is in the air and because maybe, maybe we’re starting to turn the corner on the pandemic, we thought we’d share a few more obscure indicators that are…well…fun.
One of the oldest of the obscure economic indicators, this one was developed around the time of the Great Depression. The theory goes that one can predict what will happen to the economy by the length of women’s skirts: the shorter the hemlines, the stronger the economy.
Honestly, this one is not used routinely, as its accuracy and predictive power is iffy at best and largely anecdotal. However, in 2012, Business Insider actually conducted a formal analysis of the hemlines at New York Fashion Week, measuring 2,092 images and comparing those lengths to 2011. The findings were clear: hemlines were getting shorter. And lo and behold, the next year was better, economically.
Although Fashion Week is being produced quite differently this year (e.g., it’s not a formal “week”), there are some 2021 images available. A completely unscientific scan shows generally conservative hemlines on skirts and dresses, with a trend toward pantsuits.
Market research pioneer Leo J. Shapiro used to talk about this one all the time, usually with a twinkle in his eye, and it was a favorite of legendary Fed Chair Alan Greenspan. As the name suggests, the gist is that one can track the economy via men’s underwear sales, with the assumption that men consider their underwear to be a luxury, not a necessity. So, when dollars are tight, if their boxers are a little faded or have a small hole or two, they can live with it for a while. Which makes men’s underwear a little like the first robin in Spring: you know consumers are starting to feel more confident about their finances when men replace their old briefs.
The women’s version of the Men’s Underwear Index, but reversed. After 9-11, Estee Lauder Chairman Emeritus Leonard Lauder noticed a trend in lipstick sales – they were stable if not stronger during times of recession. While this theory is hard to prove (standalone lipstick sales data aren’t readily available), it’s intriguing and seems “truthy” – people in recessions tend to want low-cost items that still feel luxurious and boost their self-confidence
Like the Hemline Index, this one usually seems a bit shaky. A McKinsey report shows cosmetics as a whole have gone up steadily since 2005, regardless of how the larger economy is doing, and if so, that’s not particularly useful as a barometer.
However, this year, 71% of women say they’re wearing makeup less often due to COVID, between remote working and masks that cover half the face. It may be that we’ll see a sharp increase in cosmetics sales over the summer, but if we do, it may have less to do with finances and more to do with less need for face masks.
(Side note: While consumers weren’t buying as much makeup in 2020, they were buying more hair dye and skin care products.)
Next, a couple of indicators that are pretty reliable, but the specifics of a pandemic-recession may turn them on their heads.
It seems obvious…consumers don’t buy big-ticket, non-necessity items when they’re worried about their finances. Declines in RV purchases are a fairly reliable indicator of economic stability, falling shortly before economic downturns and rebounding after things recover.
However, in 2020, RV sales were up nearly 5%. Which makes sense. The Great Outdoors was just about the safest place to be. Visitation to National Parks held pretty steady from 2019, which is astonishing given that all of them were closed for weeks, and many continued with reduced hours.
Once other travel options, like flying, feel safe again, RV sales may decline.
In non-pandemic years, the stronger the production and sales of cardboard shipping boxes are, the stronger the economy. Normally, 75-80% of non-durable goods are shipped using cardboard containers, so an increase in demand should indicate more buying and shipping.
This year, all bets are off. Online shopping surged this year out of safety concerns, and more boxes showed up on porches across the country. Even Baby Boomers – slower to embrace internet retail – have gotten comfortable with online shopping, with spending up 49% from 2019.
Because of this trend, it’s possible that, as consumers return to feeling more comfortable in stores, the demand for cardboard boxes may actually fall during recovery.
The truth is that this pandemic is simply not like other recessions. We’ve written about how this is the first economic downturn to impact women more than men. And the main economic indicators are out of whack this year. What do we make of a strong stock market and a housing boom coinciding with millions of jobs lost? That’s not your run-of-the-mill recession.
Further, when we talk about recovery in 2021, it’s obviously bigger than the economy, and we already know some of the indicators we’re looking for: percent population vaccinated, low positivity rates, minimal hospitalizations and deaths. Other data seems intuitive: dining-in at restaurants, theater openings, airline travel, hotel bookings.
It does make us wonder. This is the first time we’ve confronted a truly global pandemic in the Information Age. As economists sift through the data in the months and years to come, what new indicators will they uncover, specific to pandemics?
Whatever they come up with, here’s hoping we won’t have to use them again for a long, long time.