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The Over/Under(wear) of Our Economy

Practically every time you turn on the news and hear the talking head discuss the economy, you usually get about six words into their spiel and your brain explodes – because they’re always talking about “mitigating factors” and “behavioral predictors”. Why do they employ such gobbledygook (that’s a word) when they talk about the economy? Because they’re just guessing, and they’re trying to make you think they’re smart. Believe me, I went to college with a bunch of budding TV journalists, and their class load didn’t involve Doctorate studies in macro- versus microeconomics in the 12th century – it was a lot of voice projection and learning how to stare at your interviewee until he gets really uncomfortable.

The following items of discussion are not my own making – I’m not that smart. Fortunately, though, someone was smart enough to distill this information down to a level I can understand, and I now submit this to you for your illumination. Here’s a list of more down-to-earth ways to track how the American economy is doing:

Lipstick Index
The “lipstick index” is a term coined by a guy at Estee Lauder in 2001. Since then, the concept has been expanded to nail polish and foundation. However, the basic idea remains the same: when finances are tight, consumers will forego large luxury purchases for smaller indulgences, like cosmetics.

Men’s Underwear
The men don’t want to be left out – this is a good indicator of the economy because it’s a basic necessity whose purchase can be pushed into the future until more disposable funds are available. This “index” came from that laugh riot, Alan Greenspan.

The Hemline Index: the theory behind this indicator is that women’s hemlines tend to follow the stock market. Skirts tend to get shorter during boom times, while ankle-length hemlines signify a bear market.

Cardboard Box Shipments
The idea behind this one is simple: many goods ship in corrugated cardboard boxes, so when box companies are producing more, it’s a good economic sign.

Now, I’m fairly confident the folks at the Fed, at their meeting this week, aren’t going to be discussing whether Alan Greenspan has purchased a new set of briefs (or boxers) or what color lipstick Janet Yellen should or shouldn’t wear (I think she should go with an autumn shade), but we lesser mortals can read the “signs” as well as they can – just fire up the internet and type in a few key words. You might want to avoid “men’s underwear” and “lipstick” in the same search, though.

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