(This column originally appeared in The Guardian)
Is the country heading towards a recession? Ask 10 economists and you’ll likely get 10 different answers. Which is why some people have given up on the traditional data — GDP, jobs, etc — and have instead recently been tinkering with more unusual economic indicators to help them guide their companies. Here are a few that I’ve seen.
Uniform patches
One known economic indicator is jobs and for that we tend to rely on unemployment numbers from the Bureau of Labor Statistics. But maybe there’s something better. Like the number of uniform patches sold each year. Uniform patches? Yes, those are the emblems that go on the uniforms worn by millions of workers, from fast food cashiers to drywall contractors. The financial data of one of the world’s largest makers of emblems and patches — privately held World Emblem — can’t be easily obtained. But the company’s owner recently told USA Today that sales are up 19% from the same period last year. A recession? “We’re not seeing it,” says Randy Carr, CEO of the Fort Lauderdale, Florida-based company. “It’s hard to believe there would be.”
Men’s underwear
Ask any guy about underwear, and they’ll usually admit the same thing. When times are good, we’re buying the good material. When money’s tight, we’re wearing those things until they literally fall off. So do men’s underwear sales mirror the economy overall? Some — including former Federal Reserve chief Alan Greenspan — think so. If you want to check out how the men’s underwear business is doing you can look at Hanesbrands or PVH Corp (which owns several leading brands, including Calvin Klein and Tommy Hilfiger) or Ralph Lauren Corporation. “Bottom” line: men’s underwear sales have been mostly flat over the past 12 months.
Lipstick
For the most part, lipstick is a relatively inexpensive accessory, with a typical tube costing anywhere from $5 to $20. History has shown that women will cut back on more expensive beauty goods like makeup and perfume when times are tight. But lipstick? Don’t even go there. When lipstick sales increase as luxury beauty item accessories decrease, that’s another potential sign of economic headwinds. Where to research lipstick sales? Try the big cosmetics companies like L’Oreal, Estee Lauder and Ulta Beauty. All three companies have shown strong revenue gains over the past year.
Overseas freight
World shipping has a significant impact on our economy and instead of tracking units and cargo activity, some economists instead track the price of freight. Why? Because in a supply and demand world, the greater the demand for shipping, the more freight should cost. To track this phenomena, look no further than the Baltic Dry Index. This is a well-watched measure of freight costs for shipping items across the Baltic Sea, one of the world’s busiest shipping lanes. So how are freight costs doing? They’re up more than 55% over the past year and even slightly higher than pre-Covid times.
Recreational vehicles
If you’ve never taken a trip in a recreational vehicle (RV), you’re missing out. It’s fun and a great way to explore our national parks. Some economists think that RV sales are an economic indicator because RVs — a luxury item — are not only expensive to buy, but they come with high maintenance costs and tend to calculate gas usage by gallons per mile. So how’s the RV industry doing? Judging by one of America’s largest makers of these vehicles — Winnebago — not so great. Sales have been declining for the past few years and the company’s stock price has fallen 35% in the past year.
I’m only scratching the surface on unusual economic indicators. Besides RVs you can follow the sales of champagne. Instead of men’s underwear you can also track women’s hemlines (which are believed to rise and fall along with the stock market). You can dig into the buttered popcorn index (which some say increases during times of recession as a small bit of a luxury in an otherwise cruel world). You can even keep track of hairstyles in Japan, where some say that women wear their hair longer when times are good and shorter when times are tough. Good luck finding this data, let alone making any sense of it.
Goofy economic metrics like these are fun to talk about with your friends and colleagues. But they shouldn’t be taken seriously. I run a business, and my go-to economic indicator is my clients. I’ve learned that the best way to insulate my business from the economy is to diversify: have as many clients in as many industries and geographic locations as possible. The US is a big country, and even when one client is cutting back on his underwear purchases in Illinois, I’ll likely have another buying uniform emblems in Texas. Focus on this instead of lipstick.
