The pandemic seems to be coming to an end and we are heading straight for a recession. How do you know if we are in a recession? Officially the indicators of a recession are declining GDP, the decline in real income, the decline in employment, the decline in production, etc. However, what we are going to talk about today are signs of a recession that you see on a daily basis around you.
How do things change on a day-to-day basis for an average human during a recession? Some of these signs of recession are fun, quirky ones that you might not have noticed before like lipsticks, skirts, cardboard boxes, and soaring skyscrapers. These are things that you will surely start noticing after you read about them.
1) The Hemline Index
“The Hemline Index” is basically a theory about the length of the hemline of skirts and how it relates to the current state of the economy. This theory claims that when the times are good and the economy is doing great, the hemlines slide up riding the highs of the stock market. However, when the economy is down, the hemlines drop to reflect the state of people’s bank accounts.
This theory has been proven true again and again looking as far back as the 1920s and the great depression era. The pattern of high and low hemlines has repeated alongside the state of the economy since then.
If you see a creepy guy on the street ogling at women’s legs, perhaps reconsider your judgments. Perhaps, he just trying to gauge the current economic climate. (I kid of course! He’s most likely just a creepy guy)
My take on this theory is that shorter skirts/outfits go hand in hand with fun and entertaining events. When the economy is high, we are more likely to spend frivolously on restaurants, and entertainment. On the other hand, longer skirts go with working hard, getting serious, and taking care of business.
Of course, this theory is not bulletproof, there are many contradictions that can be found throughout history. Many other things such as politics, social climates, and wars can affect fashion trends. It would be fun to see if we will see this theory come alive during the upcoming recession. [Though, I feel like I have already started to notice the trend of wearing low-riding long skirts with crop tops, signs of a recession?]
2) The Cardboard Box Index
The cardboard box index states that the higher use of cardboard boxes indicates a good economic status of the community.
You wouldn’t think that a simple cardboard box can be a good indicator of the economic state of a country. However, it makes sense for a consumerist country like the united states of America. If you think back to the purchases you made within just the last 30 days, the majority of them most likely involved the use of cardboard in some form.
Historically, cardboard box production in the united states has followed economic trends. During both the 2001 and 2008 stock market crashes, the sales of cardboard boxes also plunged. Due to the boom of online shopping in recent years, the cardboard box index has been even more crucial in determining the economic state of the country now.
In order to track the demand for cardboard boxes in the United States, the Federal Reserve System gathers and publishes data on the manufacturing and demand of cardboard containers each month.
When the economy is down and our buying habits change with it, we shop for fewer and fewer things. Lower consumeristic activities bring down the use of cardboard used to ship things around the world. During an economic downturn, people don’t move often. Therefore, fewer cardboard boxes are consumed for moving.
Have you seen any change in the usage of cardboard boxes around you? Are your neighbors getting fewer and fewer packages?
3) Men’s Underwear Index
It’s theorized that men will keep wearing their underwear even with holes in them in order to save money during an economic downturn. Thus, a drop in demand and sales of men’s underwear can indicate an oncoming or ongoing recession. And that is the Men’s Underwear Index.
According to CNN, during the great recession of 2008, men’s underwear sales fell significantly. The sales rose gradually starting in 2010 as did the stock market. A man’s underwear is the most intimate clothing item. who’s gonna see it anyways? why spend money on frivolous things, especially during a recession? Makes sense to me.
Underwear is the last piece of clothing that men replace, so during hard times, they don’t prioritize buying new underwear.
I wonder why the same isn’t said about the trend in women’s underwear sales. Something to think about.
Here’s how to develop habits that will save you money during a recession.
4) Soaring Skyscraper Conundrum
Andrew Lawrence, a director and former real estate analyst with Barclays Capital, believes that whenever the throne of “The world’s tallest building” has been passed on to a new building, it has marked the beginning of an economic downturn. This theory is so specific that I almost don’t want to believe it. However, let’s look at the historical evidence.
Data going back to the 1800s showed a correlation between the completion of a new world’s tallest building and the start of an economic bust:
- Philadelphia city hall (1901) – Market crash of 1901
- Empire State Building (1930) – Great depression
- Willis Tower (1970) – Stagflation in the US
- Burj Khalifa (2009) – We all know what happened in 2009 !!
As you can imagine, building a project like a world’s tallest building requires a ton of money. If the economy is in a state where a project like this finds funding and is completed, the economy is probably expanded so much that it’s nearing a bust. Historically, an economic bust usually occurs right after an economic boom.
Additionally, economists also say that, if the completion of the world’s highest skyscraper indicates a boom, then the planning of these skyscrapers also indicates a growing GDP. As you can imagine, during a growing economy, demand for living spaces and office spaces rises in the high-demand areas. Raising demand and rent prices are great motivators to expand buildings.
Currently, the only skyscraper taller than the Burj Khalifa that’s under construction is the Jeddah tower. Its construction is stalled until further notice. What do you think that means? I can take a guess.
5) The Swiping Frenzy
Online dating activities have been observed to be higher during economic downturns. Unemployed people have a lot of free time on their hands. If you are going to be miserable during a recession, why be miserable alone? You know what they say about misery and what it loves, right!!
Society actually thinks that single people don’t have a lot of expenses, thus more income to make frivolous expenses. The reality is actually the exact opposite. Many of the habits and behaviors associated with single people cost them a lot of money.
During a recession, you want to conserve as much money and resources as possible. What can be a better saving strategy than having most of your expenses cut in half? When you are in a relationship, you can split the rent, utilities, groceries, vacation expenses, etc. There are so many instances where being single is much more expensive than being a couple. For example, you only have to get one gift when you go to an event as a couple, the same as a single person.
More importantly, being a couple provides a sense of security during scary times like a recession. When you aren’t single, you can rely on a partner if you get sick or lose your job.
According to a survey done by TD Ameritrade, single people make an average of $8,800 less compared to their colleagues who are in relationships. Not only do single people make less money, only 33% of single people consider themselves financially secure compared to 50% of married people.
With all the financial and mental health benefits of being in a relationship, people are drawn towards it during a stressful time like a recession.
Match.com stock price soared during both the 2009 and 2020 stock market crashes. Bumble, which is a big competitor of Match actually reported very high earnings during Q4 recently. signs of a recession???
6) The Lipstick Index
During a recession, it is hard to find a budget for expensive items. Therefore, women opt for buying small pick-me-ups instead, lipsticks in particular. Making a discretionary purchase like lipstick provides a way to uplift emotional well-being without breaking the budget.
If you know anything about makeup, you probably know that lipsticks are transformational. A bright lipstick can instantly transform your face. It’s just a bonus that lipsticks are so easy and quick to apply, unlike other makeup items.
Leonard Lauder, Este Lauder chairman, came up with the Lipstick Index after the 2001 economic bust. He observed the surprising increased lipstick sales (11% increase contributing to a total of 25% increase in cosmetics) and recognized it as a sign of recession.
As of 2020, as noted by Este Lauder, the Lipstick Index has been replaced with Skincare Index. During the pandemic, most people were not going out and thus did not need a lot of makeup items. People focused on self-care, thus skincare face masks became the new small pick-me-up. The small pick-me-up item might change over time but the concept remains in effect.
7) The champagne Index
Champagne has been a symbol of good times and celebrations since it became popular during the economic boom of the mid-1980s. However, the consumption of champagne fell from 15.8 million bottles in 1987 to 10 million bottles in the 1992 recession according to the Champagne Bureau.
The pattern of a decline in champagne sales was observed during the great recession of 2009 and the 2020 pandemic. In 2020, it was probably more likely due to the non-gathering rules of the pandemic than the stock market being down.
Other Unusual Signs of a recession
- Short-Term Bonds: The sales of short terms bonds surpass the sales of long-term bonds offered by the government during an economic downturn. At the beginning of 2022, the government recently announced short-term e-bonds with high return interest rates.
- The Marine Ad Index: When the times are good and unemployment rates are low, fewer people tend to enlist in the Marines. The marine corps puts out positive advertisements to attract anyone and everyone to join. However, during a recession, when there are fewer jobs, the marine corps puts out ads that show the marine corps being difficult and endurance-heavy, so they get the very best recruits.
- Neckties: Men tend to wear more colorful and daring neckties during an economic boom. However, men tend to wear more traditions color neckties during an economic downturn.
- Diapers: Parents change diapers a lot less often when times are hard. As a consequence, there is a rise in diaper rashes, and thus a rise in sales of ointments and creams for diaper rashes.
- R-Word Index: The word “Recession” is searched at a very high rate on google right before the start of a recession. The same goes for use of the word “Recession” in news articles.
- Tech Slowdown: The slowdown of the development of technology and innovation are generally signs of a recession. Innovation and development of tech aren’t considered necessities and aren’t prioritized over sustaining products already in use. As of August 2022, more and more tech companies have been making comments on hiring slowdowns.
Finally,
As you can gauge, these are all just weird signs of a recession that are lesser known. These signs of a recession are just fun to know and think about. Some of these signs of recession are just consequences of the actual indicators of a recession such as unemployment rate, GDP decline, consumer price index, the housing market, etc.