When Lipstick Is an Unusual Indicator

Several weeks ago, we looked at unusual economic indicators.

Now we need to add one.

Unusual Economic Indicators: The Lipstick Index

The Lipstick Index was born because, in 2001, the Chairman of Estée Lauder told WSJ that “When lipstick sales go up, people don’t want to buy dresses.” Similarly, last month, Oréal’s CEO said that at just €30, “a luxury lipstick or mascara is an affordable treat.”

However, the evidence is not entirely consistent,  Confirming Mr. Lauder’s quote, during the 2001 recession, lipstick sales were up. And now, comparing October 2021 and 2022, they rose 37 percent with Target, Macy’s, Coty, and Kohl’s saying cosmetics were “rare bright spots.” However, looking at 2007-2009, we would have seen nail polish in the spending spotlight.

Our Bottom Line: Leading Economic Indicators

More formally followed, for the U.S. economy, the leading indicator metric predicts the ups and downs of business activity during the next several months. When we look at the components of the Conference Board’s Leading Economic Index (LEI), we would find a list that includes new building permits, the S&P 500 stock index, and average hours worked in manufacturing.

Reported on November 18, 2022, the LEI dip suggests that the U.S. economy will decline

In the Conference Board press release, they also let us see what drove the LEI south:

We could call lipstiock sales a leading indicator.

My sources and more: I first learned that the lipstoick indicator was back from WSJ.  And then for more at the Conference Board, do take a look here.

(Please note that some of today’s Bottom Line was in a previous econlife post)