Men’s Underwear Sales Can Help Forecast Recession: From stock prices to home starts, there are many different types of economic indicators. Did you realise, though, that sales of men’s pants can also be used to forecast recessions? Men’s pants sales may seem like a joke, but former Federal Reserve Chair Alan Greenspan discovered that they can provide important insights regarding the state of the economy as a whole. Along with several other rather fascinating non-conventional economic indicators, here’s how.
Leading versus lagging signs
Economic indicators come in two varieties: leading and lagging. Lagging indicators, such as interest rates, the unemployment rate, and inflation, reveal economic changes that have already taken place. These indicators are comparable to utilising the rearview mirror on an automobile. It reveals your past movements.
Leading indicators, on the other hand, are trends and patterns that appear before a change in the economy. They are used, together with stock market trends and consumer confidence, to predict how the economy will perform in the future. Imagine them like signs you see along the way.
For investors and politicians, leading indicators are more important than trailing indicators because they provide useful insight into upcoming occurrences. The yield curve inversion, consumer confidence, and factory production are three of the most popular leading indicators for predicting an impending recession.
There is currently a recession, as indicated by all three signs. But what about other distinct leading indicators?
Index of Men’s Underwear: Men’s Underwear Sales Can Help Forecast Recessions
Men’s pants sales, contrary to popular belief, are a leading economic predictor. Men’s pants may be the most private item of clothing in the home because no one really sees them. Men frequently use them until they are fully worn out, therefore it is frequently the final item you need to buy.
Male pants generally has consistent sales rates, but when they do, it means that men are prioritising other expenses over buying new pants. This hesitation to make a relatively cheap purchase has consistently signalled a possible recession.
What does the current underwear index indicate?
Sales of men’s pants fell after the financial crisis of 2008–2009, and the recession brought on by the pandemic in 2020 significantly decreased those sales. David Swartz, a senior equities analyst at Morningstar Research Services, corroborated this in Euromonitor data that was shared and covered by Barron’s.
Men’s pants sales in terms of dollars decreased somewhat in 2022 compared to 2021, but there was a noticeable 12% drop in the number of pairs sold. Additionally, compared to 2020, households with incomes under $50,000 spent significantly less on men’s pants in 2021. This is how men’s underwear sales can help forecast recessions.
Sales of men’s pants are currently increasing despite the drop. It’s important to remember that sales typically stagnate during economic downturns. The good news is that this treind has not yet materialised.
How Men’s Underwear Sales Can Help Forecast Recessions
These are only a few of the distinctive indications that some economists research in order to comprehend consumer behaviour and how it affects our economy. The “lipstick index,” “the champagne index,” and “the library index” are a few additional oddball indicators. These signs suggest that we shouldn’t worry about a recession just yet, but it’s still important to keep an eye on them.
Men’s pants sales are a useful economic indicator, despite the initial absurdity of this statistic. The relationship between this seemingly unimportant item and economic activity has been proven earlier, and specialists continue to constantly monitor it now. So, keep in mind that the next time you see an advertisement for men’s pants that this seemingly insignificant purchase can actually reveal a lot about if a recession is on the horizon. Get your own finances in order at this point!