The lipstick recession indicator

The lipstick index is the theory that sales of affordable luxuries rise in Economic downturns. The phrase was first popularised by Leonard Lauder of Estée Lauder in 2001 when he noticed that the company’s sales of lipstick had risen 11% after 9/11, but is the lipstick index making its reappearance?

Across TikTok, the discussion of recession indicators has become prominent, with not only the Lipstick index but also the hemline index, high heels, and nail polish sales. These theories are based on the spikes in searches and purchases of lipstick ahead of previous recessions. According to Tara Sinclair, the chair of the Economics Department of George Washington University, “the idea that you feel like you can’t buy a whole new outfit, but maybe you can just buy yourself a new shade of lipstick”. That small item that can still be indicative of your personality and that you can still show off.  The consumer psychologist Dr Cathrine Jansson-Boyd also described how “people actually purchase things to represent who they are” and that the evidence points to people attempting to boost their mood in difficult times with small treats. 

However, the luxury fashion brands seem to be leaving consumers behind as their prices rise. Since 2018, Hermes prices have risen by 40% and Louis Vuitton has released a new lipstick for approximately €140. For us, now it is possible that instead of splurging on a luxury item, we are sharing our ways of saving that money. The trend of ‘deinfluencing’ and the rise of making coffee at home and getting our own gel nail sets, but, according to Sinclair, “if people are talking about concerns about the economy then the next step is for them to pull back on their spending, and if they pull back on their spending, then they can create a self-created recession”.

Although it sounds as though we are gearing up for a recession, can we really anticipate it this way? If we do a quick search on the probability of an incoming recession there is a few mixed results, the first title that pops up is from J.P. Morgan which says “The probability of a recession has fallen to 40%”, however further down the titles say, “the next big financial crisis may be brewing” and “major bank issue warning that there’s a 93% chance of a recession in the US this year”. These alarming results are already having an effect on how people are spending with other articles on how to prepare and what to invest in “before it’s too late”. With these alarming titles, it makes sense how social media and trends are reacting. 

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