Strange Signals of a Financial Storm Brewing
Unforeseen declines in diverse product sales, ranging from cosmetics to cardboard containers, could signal approaching economic downturns beyond the stock market.
Chill out, folks. The stock market and personal finances might be hinting at a potential economic storm, but there are other, less conventional indicators that could help you duck and cover. Let's take a gander at 9 oddball indicators that have the uncanny ability to predict a recession, even before the financial suits start losing their cool.
1. Cheese and Cracker AlertYou heard that right, mate. People tend to spend less on snacks during economically instable times. Studies from the 2008 recession show that consumption of chips, fast food, and fresh produce took a nosedive. Companies like General Mills, makers of Chex Mix and Nature Valley, are already reporting a 5% drop in third-quarter sales, with both human and pet snacks seeing a slump.
2. Booze from a ThimbleWhen the going gets tough, the tough squeeze the tiny booze bottles, usually found in hotel mini-bars. It's all about keeping a lid on spending, according to CEO Lawson Whiting. So the next time you see more of these wee bottles, take it as a sign that times are lean.
3. LipstickLeonard Lauder, Estée Lauder heir, came up with this one in 2001. During the U.S. recession, he noticed an uptick in lipstick sales despite the general economic downturn. The idea is that when discretionary income is shrinking, folks treat themselves to small luxuries like lipsticks in an effort to feel better. Don't get too excited, though. The correlation isn't always reliable.
4. Men's UnderwearLooking sharp below the waistline might not be a priority during tough times. Alan Greenspan coined the theory that men buy new underwear less often when times are tough because it's not visible and can be delayed. Sales of men's underwear took a hit during the 2008/09 recession, but bounced back during the recovery. In 2020, during pandemic-related uncertainty, sales dipped again.
5. Hemlines Tell a TaleThis one dates back to the 1920s. The idea is that during boom times, hemlines get shorter, and in crises, they get longer. Some historical examples seem to support this, but whether it's mere coincidence or a genuine indicator is still up for debate.
6. Cardboard CardCardboard boxes are essential for retail, both online and offline. When demand reduces and consumers start cutting back, there could be fewer cardboard boxes moving around. In 2009, during the financial crisis, cardboard deliveries plummeted, and the same thing happened at the beginning of 2023.
7. Toe-Tingling TroubleDiapers are expensive, and during tough times, parents might cut back on changing them as often, leading to more diaper rash. Sales of diaper rash creams reportedly increased by eight percent in 2011, while diaper sales stayed stagnant or even decreased. Be careful not to jump to conclusions, though, as other factors might also be at play.
8. Bubbly BelligerenceWhen champagne sales plummet, it's a sign that folks are less likely to splurge on luxury drinks. In 2008, before the financial crisis peaked, around 23 million bottles of champagne were sold in the US. A year later, it dropped to 12.5 million. Sales took a dip again in 2020 and shot back up in 2021 as celebrations and travel returned.
9. Stripper SquintThis one's a bit more niche, but it could be a useful early warning sign. When customers are less generous with tips, it could indicate reduced discretionary spending. A financial advisor and Gen-Z expert suggests that drops in strip club tips might be a microcosm for broader consumption patterns. An economist adds that decreased tipping could signal cuts in voluntary spending due to inflation, job loss, or future anxiety.
While these indicators aren't foolproof, they can provide an interesting glimpse at the human side of economics. Keep an eye on them, and who knows? You might just have a heads-up on the next financial storm.
What indicators, beyond standard finance and business metrics, might signal an incoming recession? Intriguingly, consumption of snacks like Chex Mix and Nature Valley, manufactured by General Mills, has been declining, signaling a potential economic downturn. Another signal could be increased sales of small luxuries, such as lipstick, even during tough times, which was first observed by Leonard Lauder in 2001. The buying of men's underwear, a less visible expense, can also decrease during recessions, according to Alan Greenspan's theory. Lastly, a drop in strip club tips could be a microcosm for broader consumption patterns, indicating reduced discretionary spending, as suggested by a financial advisor and Gen-Z expert. These unconventional indicators, though not infallible, offer unique insights into human behavior and potential economic trends.
