6 Odd Economic Indicators That Can Predict Next Recession: From Beer Bars to Men’s Underwear

Is the US recession coming? While economists are busy interpreting global stock market trends, treasury yield prices and GDP data to find the answer, the business of lipstick, beer and men's underwear can offer an early sight of the economic situation.

The global stock market has entered bearish territory since United States President Donald Trump announced that he would impose tariffs on several nations. Nearly ten days after announcing tariffs, Trump reversed his decision and ordered a 90-day pause in their implementation.

While there is relief among investors, but the uncertainty about US tariffs has still overshadowed the sentiment. The US Federal Reserve recently expressed concerns over economic uncertainty in coming months. Major stock brokerage firms have raised the possibility of a US recession on the basis of macroeconomic indicators like GDP data, stock market trends, etc.

What is Recession?

According to McKinsey & Company, a recession is two consecutive quarters of economic contraction. It is caused by imbalances in the market and triggered by external, and internal factors.

6 Offbeat Indicators of Recession

As economists refer to key economic data to predict recessions, a parallel world of peculiar indicators can offer early yet accurate signs of an economic downturn or recession. As Huffpost mentioned, here are the top six offbeat indicators.

Brothel Index

There has been a noticeable decline in earnings from this business in America, as reported by HuffPost. Catherine De Noire, a manager of a legal brothel, a Ph.D. candidate in organisational psychology and an influencer told HuffPost that there has been a 'huge dip' in earnings as more and more visitors are concerned about economy.

"There are significantly fewer clients coming in, and the sex workers are reporting noticeably lower earnings," HuffPost quoted De Noire.

The Beer Index

The quality of beer people prefer to drink with friends and on social occasions is a major indicator of economic recession, according to Jack Buffington, an assistant professor of supply chain management at the Daniels College of Business at the University of Denver.

Beer is a discretionary spend and a social spend, hence when there is a larger trend of people saving on these expenses, it shows that they are worried about the economy, Buffington told HuffPost.

Men's Underwear Index

This is not just an anecdotal indicator of economic downturn but a tried and tested way to gauge the economy's health, atleast that's what former Federal Reserve Chairman Alan Greenspan believed when he observed declining sales of men's underwear in 2008, the year of financial crisis which led to The Great Recession.

Lipstick Index

Lipstick Index is an economic theory similar to Giffen's Paradox. The economics concept describes a situation where the demand for a good increases as its price rises. In the world of economics, Giffen products are cheaper and affordable and rise their demand indicates surge in inflation.

Trend on Lipstick Index indicates a contradictory consumption pattern during economic recession, said Kevin Shahnazari, a data analyst and co-founder of Finly Wealth.

As per the theory, mentioned in Huffpost article, consumer tend to substitute their costly purchases with cheap luxuries like lipstick when they are running low on money. As per the theory, a rising sale of cosmetic products like lipsticks are hint of economic recession.

"In the 2008 recession, cosmetics sales increased, showing that even in tough times, individuals crave tiny comfort purchases that give psychological boosts without a hefty financial outlay," Huffpost quoted Shahnazari.

Online Dating Index

Falling interest among people for a paid subscription of online dating application can also be a measuring scale to identify whether recession is coming or not. Noting the falling number of paid subscribers to online dating apps, Shahnazari said, "Free and lower-tier use of dating apps has risen by about 12%, indicating social and financial stress." Contrastingly, increasing use of online dating apps indicate that people are opting for affordable entertainment and companionship instead of expensive outings.

Hemline Index

Hemline, which is the length of the skirt or a dress, is another indicator of economic distress. According to Forbes, the Hemline Index signals that a boosting economy is reflected with shorter hemlines, whereas dress length increases when things look gloomy.
Hair Dye
Another peculiar index to measure economic health of a nation is the trend for hair dyes. As per Forbes report, fewer people prefer to colour their hair to prioritise their household budgeting. Most of the indicators are associated with any sort of luxury and people prefer to cut on these non-essential expenses tat the time of financial crunch.