First and foremost, we can’t technically predict if a recession is happening without actively being in a recession. However, there are certain factors that we can look out for to recognize whether or not our economy is going through a period of hardship or is signaling that a potential recession is incoming. These are often referred to as “recession indicators” and the chances that you haven’t heard of this phrase are incredibly low. Recession indicators can range from higher interest rates to drops in the housing market and shifts in consumer spending habits. Recession indicators are also interesting tools that can be used to measure and understand the status of culture and society at the time. The lipstick index is a theory used to describe consumer spending. Essentially, during a recession or a period of economic difficulty, the sales of “affordable luxuries” such as lipstick rise.
The lipstick index theory was developed by Leonard Lauder, the chairman of Estée Lauder, in 2001. During the 2001 recession, the company recognized that, while consumers were becoming pickier with their spending, the demand for smaller items like lipstick and perfume went up. The proposed explanation is that while people going through financial difficulty find themselves unable to afford larger expenses like a home or a car, they have enough money to spend on smaller and more affordable indulgences. You might not have enough money to take your car to the mechanic, but you do have the $20 to spend on a rhode peptide lip treatment! This is not just a modern phenomenon: it goes all the way back to World War Two, where designer fashion brands like Dior and Chanel released more affordable lines aimed at younger consumers to get them to spend their money on more small luxuries at a time when they might not have been able to afford larger ones.
At its core, it’s retail therapy. If you’re going through a hard time, you are more tempted to indulge in some sort of self-care or treat. This idea of treating yourself is prevalent in modern culture and is especially popular in online spaces. The lipstick index, despite its name, isn’t only applicable to lipstick; it refers to small luxuries in general and, if you open up TikTok or Instagram, you will see lots and lots of small luxuries. From the clothing and makeup hauls to the sweet treat epidemic, everyone is trying to convince you that spending those next few dollars will be just what it takes to make you feel better. The idea of getting a little treat gives you the hit you need from buying something new, while not hurting your wallet too badly. I am not ashamed to admit that I have found myself victim to buying a little treat here and there, either going to get an iced matcha latte after a long day or stopping by Ulta to browse after the end of a particularly difficult week.Â
I don’t necessarily think there is anything wrong with getting yourself a little treat. Life is difficult, and if spending a little money once in a while might bring you a bit of joy then, really, there is no harm done. However, those little treats can build up. If you spend $30 on a lipstick on Tuesday, $15 at a trendy new coffee shop on Thursday and $75 on a new perfume on Saturday, those affordable expenses all add up and become more and more expensive. That doesn’t mean you never have to spend money on “non-necessities” but what it does mean is that you need to be aware of your spending and try to make those special treats occasional rewards rather than everyday occurrences.