What can lipstick, men's underwear, and hemlines tell us about the economy?

Steven Loeb · May 2, 2023 · Short URL: https://vator.tv/n/56b2

Some of these economic indicators are becoming outdated, while AI is the future of trend forecasting

We've spent the last year and half or so listening to people go back and forth about whether or not we're in a recession, or if we're heading for one, or if the economy is actually doing fine.

There's obviously been no consensus on this; as Forbes points out, there isn't even a single definition of what a recession is. The most common is two consecutive quarters of negative gross domestic product, which would mean we were in a recession in early 2022; another definition, though, for a recession is "a significant decline in economic activity that is spread across the economy and that lasts more than a few months," which would mean the opposite was true. 

Given all of that, maybe there are other variables we should be looking at that would help understand where we are right now: as outlined by Stylumia, a systemic fashion AI SaaS platform for trend forecasting, there are a few economic indicators that could help point the way, including the Lipstick Index, aka the idea that consumers tend to purchase more affordable luxury goods, of which lipstick would count, rather of splurging on expensive items, when the economy is bad.

Another potential indicator of economic performance is the Men’s Underwear Index, which is the idea that men will postpone the purchase of new underwear during economic downturns. 

There's also the Hemline Index, which says that skirt hemlines tend to rise during periods of economic prosperity and fall during economic downturns, and the Cardboard Box Index, which is the belief that an increase in cardboard box demand is a good sign for the economy because it means that more goods are being shipped.

Of course, as Stylumia points out, there are problems with each of these; for example, sales of lipstick can be influenced by a number of factors, including changing beauty trends, social influences, and cultural norms, as can the sales of men's underwear, which can be attributed to the growing popularity of online shopping. 

Not to mention that the Lipstick Index and Hemline Index don't take into account different regions and cultures having different standards of beauty, while the Cardboard Box Index can be attributed to seasonal fluctuations, shifts in manufacturing processes, or the adoption of alternative packaging materials.

Stylumia also points to one other way of measuring the economy: the Generative AI Index, which uses technology to analyze data from sources such as social media, search trends, and consumer spending habits to uncover patterns in consumer behavior.

Even this indicator, however, is not without its potential flaws.

"While the Generative AI Index holds promise for the future, it is important to acknowledge the potential limitations and ethical concerns related to data privacy and algorithmic bias. Ensuring responsible use of AI and addressing these concerns will be crucial in the successful implementation of such an index," Ganesh Subramanian, founder and CEO at Stylumia, wrote.

"Furthermore, relying solely on AI-generated insights may not be sufficient, as human expertise and intuition still play an essential role in understanding complex market dynamics and making informed business decisions."

(Image source: bustle.com)

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Accelerating waste reduction from businesses with relevant technologies and consumer at the centre. A student always.