From Labubus and men’s underwear to lipstick and skirt hems, signs pointing to or away from a recession are everywhere.
Whether they’re accurate indicators of the economy’s health is another matter.
Here’s how recessions are actually defined: A committee with the National Bureau of Economic Research that maintains a chronology of US business cycles pores over official monthly releases from government agencies, like employment and income data, to date periods that represent a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
That process can take a while. In June 2020, for example, the NBER declared the country had entered a recession in February of that year — an unusually fast determination. In July 2021, the NBER said the country had exited the recession in April 2020.
Otherwise, experts turn to other reliable, albeit unofficial, recession signs, including two consecutive quarters of negative GDP growth, or the “Sahm rule,” which finds the start of a recession occurs when the three-month moving average of the US unemployment rate rises 0.5 percentage points or more, relative to its 12-month low.
Now, with consumer sentiment tanking, inflation ticking higher, the job market stagnating — and social media users speculating that short, bare nails herald economic malaise — here are other less-than-traditional measures to watch.
Read more: What is a recession?
Cardboard box demand is sometimes seen as an indicator of economic health, since the majority of what consumers purchase touches corrugated cardboard. Here’s the not-so-great news: Right now, US box makers are cutting back on production, said Jadrian Wooten, an economist at Virginia Tech. Box shipments are also down.
“I love this recession indicator, or I guess potential indicator, because it is such a common item that I think a lot of people take it for granted,” Wooten said.
Even former Federal Reserve chairman Alan Greenspan reportedly used to track cardboard prices.
“The cardboard box industry is incredibly large — we’re talking close to $100 billion in revenue,” Wooten said. “What I always tell my students at Virginia Tech is that it’s four times as big as the NFL, and they hear about the NFL every day, on TV, on social media, there are video games about it. We don’t have that about the cardboard box industry. It’s so much more important.”
Many US boxes are shipped abroad, and exports are expected to weaken amid trade tensions, which could help explain lower packaging demand. US consumer spending, which has so far remained resilient, may also grind lower as prices rise, dimming the need for tons of shipments.
Right now, the cardboard story is also one about capacity, Wooten said, with multiple plants being taken offline in the most dramatic cuts since the Great Recession.
All of this taking place before the holiday shopping season is doubly concerning.
“This is actually the peak time for the holiday season that we would expect to see ramp-ups in cardboard box production happening,” Wooten said. “That’s probably the biggest concern in terms of a pending recession: Companies are not ordering cardboard boxes to put their products in to then send to Target or Walmart for the holiday season.”
Americans have long sought to tease economic signals from fashion and style choices. It’s been said, for example, that skirt hemlines lengthen, natural roots start to show, men’s underwear goes unreplaced, and clothes grow more muted during an economic downturn.
It’s also been said, however, that many of those “indicators” are far from reliable. The hemline index in particular has been debunked — midi skirts trended in 2019, for example, when economic conditions were otherwise solid, and micro-mini skirts trended around the time the dot-com bubble burst.
And it was Greenspan, again, who told NPR that a dip in men’s underwear sales could be indicative of a troubled economy.
But is it?
“I cover Hanesbrands and Gildan, which both make underwear, and I can tell you that nobody at either company has ever told me that,” said David Swartz, a senior equity analyst for Morningstar.
“Greenspan was totally blindsided by the economic crisis in 2008, so clearly his underwear indicator did not help him, did it?” Swartz added.
During times of economic hardship, retailers may say consumers are becoming more “choiceful” or discerning in their purchases.
“It doesn’t mean that they don’t spend, it just means that they aren’t necessarily spending on things as they would if the economy was in better shape,” Swartz said.
A few months after the 9/11 attacks — at which point the US was already in a recession — Leonard Lauder, then the chairman of the Estée Lauder Companies, said “when things get tough, women buy lipstick,” according to a Guardian report from the time.
“In stressful times, many consumers are reaching out for those small indulgences that provide momentary pleasure,” Lauder said.
This sentiment started being referred to as the “Lipstick Index,” and it somewhat tracks with the idea of today’s “little treat economy,” or the rise of people indulging in more affordable pick-me-ups (an iced coffee, maybe, or a cute keychain) as a form of self-care.
“I don’t know that there’s any clear evidence that women decide to buy more lipstick because they feel bad about the economy or something like that,” Swartz said. “My opinion would be that when there’s a recession, people cut back on everything, and that probably includes lipstick.”
More indicative of economic conditions, perhaps, is whether or not people are going out to eat, which is generally more expensive than cooking at home. And restaurant traffic is indeed on the decline, with the cost of food away from home up 3.9% in the past year.
“You can also look at things like sales in discount versus sales in department stores,” Swartz said. “We’ve seen much stronger results from retailers like TJ Maxx and Nordstrom Rack and Ross compared to department stores. We’ve also seen weakness in the luxury space.”
Read more: What is consumer confidence, and why does it matter?
Sean Bagniewski, a Democratic state representative in Iowa serving the Des Moines area, posited in a newsletter he sent in August that the apparent lackluster demand for giant, 12-foot skeleton sales at Home Depot could suggest economic rain clouds ahead.
He has his own “Skelly” and noted that “there are lively Facebook groups that focus on this and other Home Depot Halloween items each season.” Despite retailing for $299, they often sell out fast when they hit stores. And, since Home Depot (HD) did not do a spring sale of Halloween decorations this year, Bagniewski told Yahoo Finance, it seemed likely that August’s decoration drop would generate a lot of interest.
“Though I have one, I was curious to watch how the Skellies got snapped up when they were released at about 5:15 one morning earlier this month,” he wrote. “In 2023, all of them were purchased within the hour. In 2024, all of them were gone by noon. This year, there were more than 3,000 that were still available on the Home Depot site 13 hours after they were released.”
“That’s not as fancy as Greenspan economics, but I’d say it’s interesting anecdotal evidence that folks are feeling a pinch in their pocketbooks,” he added.
A spokesperson for Home Depot said they couldn’t “share any sales specifics around any products,” though “we continue to see fans embracing Skelly into their Halloween collections.”
As of the morning of Sept. 23, Skellies remain in stock. Indeed, some commenters noted in a Facebook group devoted to Home Depot’s Halloween products that they had tighter budgets this year or were waiting for discounts, though others spent thousands of dollars on decorations.
Still, Bagniewski sees red flags when families scale back on luxury items that make their kids happy.
“If people aren’t buying those — and it’s been a hot-ticket item in past years — then that should be somewhat of a warning sign,” Bagniewski said.
Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at emma.ockerman@yahooinc.com.
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