Is a recession coming? Alan Greenspan says the answer lies in men’s underwear


New York
CNN Business

Former Federal Reserve chief Alan Greenspan has a keen interest in men’s underwear.

Not because he’s concerned about the evolution of bottoms fashion, but because he sees underwear sales as a key economic predictor.

Sounds weird, right? But it’s just one of many weird ways experts try to predict booms. and busts.

“He once told me that… the most private piece of clothing is men’s underwear, because no one sees it except people in the locker room, and who cares?” longtime NPR correspondent Robert Krulwich Greenspan saying years ago. Those sales are usually steady, “so on the few occasions they go down, that means men are so tight they decide not to replace underwear.”

The Men’s Underwear Index (yes, it exists) supports Greenspan’s theory: US men’s underwear sales fell significantly between 2007 and 2009, during the Great Recession, but picked up steam again in 2010 as the economy slowed down. He recovered.

Analysts are always looking for signs that could predict a recession. Just as a stampede of animals fleeing to higher ground can be an early sign of a tsunamithe same rules can be applied to the state of the economy.

This is why there has been so much talk lately about inverted yield curves, or the phenomenon of short-term bond rates rising more than long-term yields. It is believed to be a sign that a recession is coming, and for good reason: it happened. before every economic downturn since the 1970s.

But there are a number of less technical and more fun measures of economic downturn, and not all of them revolve around boxers and briefs. Here are some strange but semi-accurate ways economists track the health of the US economy.

Andrew Lawrence, director and former real estate analyst at Barclays Capital, created the “Skyscraper Index” in 1999. His theory was that an increase in very tall buildings occurs as we approach bankruptcy, and when a building that breaks the record for the world’s tallest is completed, a recession or economic crisis is imminent.

“We took the index back to the end of the 19th century and found that even going back that distance we could still find correlations between economic crises and the completion of the world’s tallest building,” he said in an interview.

The Empire State Building was completed in 1930, just in time for the Great Depression, while the Sears Tower (now Willis Tower) and the Twin Towers of the World Trade Center opened in the early 1970s when the US was plunged into stagflation. In October 2009, the construction company Emaar completed the exterior of Dubai’s Burj Khalifa, and two months later, the Dubai government nearly defaulted.

Lawrence links these lofty ambitions to cheap credit, excessive investment, and rampant speculation, typically signs of an economic top.

Today, most projects to build the tallest tower are on hold. But in another way, billionaires are still spending their money to fly to the sky: Jeff Bezos, Elon Musk and Richard Branson are all competing in the space race.

Leonard Lauder is created, president of Estée Lauder the lipstick index during the economic downturn that followed September 11, 2001. She noticed that the purchase of cosmetics, lipsticks in particular, tends to be inversely related to the economy because women replace more expensive purchases with small stimulants. In the fall of 2001, US lipstick sales increased 11%. And during the Great Depression, cosmetic sales overall increased 25%.

But the theory doesn’t always hold up. The research group Kline & Company found that while lipstick sales increase in tough economic times, they also do so in boom times.

However, related hypotheses abound. In 2020, at the height of the Covid economic downturn, Estee Lauder CEO Fabrizio Freda said the lipstick index had been replaced by a skincare item as customers put on masks and worked from home.

“The lipstick index has been replaced by the hydration index”, Fred said. “But the concept of the index is still there.”

What is worse than losing money? Losing money and feeling lonely.

Dating sites like Match Enjoy a boost during busts. The company reported its biggest fourth-quarter profit in seven years. during the Great Recession of 2009. In 2020, while Covid was raging, the the share price increased by 141% between March 2020 and March 2021.

It makes sense. Unemployed people have a lot of time to move. Online dating is (relatively) cheap and misery, as we all know, loves company.

If the indicator is correct for the current times, analysts should be concerned. Match competitor Bumble reported stronger-than-expected fourth-quarter earnings this month and received an update from analysts, sending shares up 22%.

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