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Is the US economy already in recession? Here Are 8 Offbeat Indicators To Look For

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Is the US economy already in recession? Here Are 8 Offbeat Indicators To Look For

After two quarters of contracting GDP in the US, a debate has raged in Wall Street and Washington about when the country will be in recession – and whether we are already in one.

Technically, the call is made by a panel of experts looking at monthly indicators of employment, consumer spending, personal income and manufacturing. But with inflation at a four-decade high, many Americans already think the country is in recession.

Throughout history, pundits have observed many unusual measures to be read as signposts. Here’s something.

Men’s Underwear Index

Former Federal Reserve Chairman Alan Greenspan was a fan of tracking men’s spending habits on underwear based on the thesis that they would have a hard time stopping buying boxers and briefs.

This proved to be true during the 2008 financial crisis and again during the 2020 pandemic quarantine, according to data from Euromonitor.

Morningstar analyst David Swartz said apparel purchases fell across the board due to rising unemployment and declining spending. “If you use this as a barometer, the most important retail sales to watch are Fruit of the Loom and Haines at Walmart and Target, where most of America buys its underwear.”

Hansbrands Inc. may provide a clue when it reports second-quarter earnings on Aug. 11. Walmart Inc., which reports Aug. 16, recently cut its profit forecast because of the deeper discounts needed to offset the build-up of slow sales for items like apparel.

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Champagne Index

Bubbly, often used to celebrate good times, has been seen as a harbinger of things to come since the mid-1980s, when shipments soared during the Wall Street boom. According to Champagne Bureau figures, consumption reached 15.8 million bottles in 1987, then crashed during the recession, dropping to 10 million bottles by 1992.

This pattern repeated during the Great Recession: consumption increased to 23.2 million bottles in 2006, then fell to 12.6 million by 2009. Although 2022 data is not yet available from the Champagne Trade Association, NielsenIQ data shows US sales of sparkling wine each month. Last year, May and June fell in the 7% to 8% range.
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Lipstick Index

In the early 2000s, Estée Lauder president Leonard Lauder coined the term “lipstick index” when he remarked that women indulged in little luxuries like lipstick to make themselves feel better during recessions.

Data analytics firm NPD backs it up: Of the 14 discretionary retail spending industries showing increased unit sales this year, beauty is the only one. The NPD pointed to the industry’s strong, double-digit growth in a recent report.

hemline index

Skirt length has been closely followed since the Great Depression, when it was first observed that the hemline goes up during bull runs and down during the bust. The short skirts of the flappers of the Roaring Twenties were replaced by long dresses during the Great Depression and mid-length outfits during World War II.

More recently, mini-skirts were popular during the period of prosperity before the pandemic. But with Covid fatigue, the ongoing war in Ukraine and economic uncertainty, midi and maxi dresses are all the rage now.

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diaper rash index

Then there’s the diaper rash theory: Some believe that parents try to save money by changing diapers less frequently during a recession, leading to a boom in sales of ointments and creams to treat irritation. IRI data shows that the sales volume of these products in 2022 is significantly higher than the previous years, while unit sales of diapers are lower than before the pandemic. However, Krishnakumar Davy, President, Client Engagement, IRI, said this could be due to several other factors and may not be related to the economy.

Cardboard Box Index

Cardboard-box shipments are often used as a measure of manufacturing activity because they carry many items. Tim Nichols, chief financial officer of International Paper Co., said in an earnings call last week that in the second quarter, demand was lower than expected and likely to remain flat as Americans change their spending habits.

“I think it’s a reaction to inflation,” he said. “Inflation is real and people are making choices.” US demand for shipping pallets has also cooled.

R-Word Index

In the early 1990s, economists invented the “R-word index” to count the number of stories in newspapers mentioning a “recession”, and it was used to describe the start of the US recession in 1990, 2001 and 2007. done for

Google Trends is seen as a similar measure. Searches for “recession” occurred during periods defined by the National Bureau of Economic Research as recessions – and have been increasing since June.

tech slowdown

In addition to federal labor reports, Bloomberg is tracking tech companies commenting on the state of the recession — a number that has been rising steadily in recent months. Last week, Amazon said it cut 100,000 jobs in the quarter and was adding jobs at its slowest rate since 2019.

Meta Platforms Inc. Chief Executive Officer Mark Zuckerberg told employees he was anticipating the worst recession in recent history.

–With assistance from Jen Skerritt and Lara Williams.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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