{"id":612905,"date":"2022-08-02T07:31:48","date_gmt":"2022-08-02T05:31:48","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=612905"},"modified":"2022-08-02T07:31:48","modified_gmt":"2022-08-02T05:31:48","slug":"is-the-us-economy-in-recession-here-are-8-offbeat-indicators-to-watch","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/612905\/is-the-us-economy-in-recession-here-are-8-offbeat-indicators-to-watch\/","title":{"rendered":"Is the US economy in recession? Here are 8 offbeat indicators to watch"},"content":{"rendered":"

After two quarters of contracting gross domestic product in the US, a debate has raged across Wall Street and Washington about when the country will be in a recession \u2014 and whether we’re already in one.<\/p>\n

Technically, the call is made by a panel of experts looking at monthly indicators of employment, consumer spending, personal income and manufacturing, among others. But with inflation at a four-decade high, many Americans already feel like the country is in a recession.<\/p>\n

Throughout history, pundits have looked to a range of unusual measures to read as signposts. Here are a few.<\/p>\n

Men\u2019s Underwear Index<\/strong><\/p>\n

Former Federal Reserve chair Alan Greenspan was a fan of tracking men\u2019s spending habits on underwear based on the thesis that they will put off buying boxers and briefs as times get tough. This proved to be true during the financial crisis of 2008 and again during the pandemic quarantine of 2020, according to Euromonitor data.<\/p>\n

Purchases of apparel across the board fell as unemployment rose and spending declined, Morningstar analyst David Swartz said. \u201cIf you were to use it as a barometer, the most important retail sales to watch are Fruit of the Loom and Hanes at Walmart and Target, where most of America buys its underwear.\u201d<\/p>\n

Hanesbrands Inc might provide a clue when it reports second-quarter earnings on August 11. Walmart Inc., which reports on Aug. 16, recently cut its profit forecast, in part because of deeper discounts needed to reduce a buildup of slow-selling merchandise such as apparel.<\/p>\n

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Champagne Index<\/p>\n

Bubbly, which is often used to celebrate good times, has been seen as a harbinger of things to come since the mid-1980s, when shipments soared during Wall Street\u2019s boom. Consumption hit 15.8 million bottles in 1987, then crashed during the recession that followed, declining to 10 million bottles by 1992, according to data from the Champagne Bureau.<\/p>\n

This pattern repeated during the Great Recession: Consumption soared to 23.2 million bottles in 2006, then plunged to 12.6 million by 2009. Although 2022 data is not yet available from the Champagne trade association, NielsenIQ data shows US sales of sparkling wine down every month from the previous year, falling in a range of 7% to 8% in May and June.<\/p>\n

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Lipstick Index<\/strong><\/p>\n

In the early 2000s, Estee Lauder Chairman Leonard Lauder coined the term \u201cLipstick Index\u201d when he remarked that women were indulging in little luxuries like lipstick to make themselves feel better during the downturn.<\/p>\n

Data analytics firm NPD seems to back this up: Of the 14 discretionary retail spending industries that it tracks, beauty is the only one showing growth in unit sales this year. NPD in a recent report pointed to the industry\u2019s strong, double-digit growth.<\/p>\n

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Hemline Index<\/strong><\/p>\n

Skirt lengths have been closely watched since the Great Depression, when it was first observed that hemlines go up during bull runs and down during busts. Flappers\u2019 short skirts of the Roaring Twenties were replaced with long dresses during the Great Depression and mid-length outfits during World War II.<\/p>\n

More recently, mini-skirts were popular during the period of prosperity preceding the pandemic. But with Covid fatigue, the ongoing war in Ukraine, and economic uncertainty, midi and maxi dresses are now all the rage.<\/p>\n

Diaper Rash Index<\/strong><\/p>\n

Then there\u2019s the diaper rash theory: Some believe parents try to save money by changing diapers less often during downturns, which causes an uptick in sales of ointments and creams to treat irritation. IRI data shows sales volume in 2022 for these products are substantially higher than prior years, while unit sales of diapers are down versus before the pandemic.<\/p>\n

However, IRI\u2019s president of client engagement, Krishnakumar Davey, said that could be due to a range of other factors and may not be related to the economy.<\/p>\n

Cardboard Box Index<\/strong><\/p>\n

Cardboard-box shipments are often used as a measure of manufacturing activity since many goods are transported in them. In the second quarter, demand was lower than expected and likely to remain flat as Americans shift their spending habits, International Paper Co chief financial officer Tim Nicholls said in an earnings call last week.<\/p>\n

\u201cI think it\u2019s a reaction to inflation,\u201d he said. \u201cInflation is real and people are making choices.\u201d US demand for shipping pallets has also cooled.<\/p>\n

R-Word Index<\/strong><\/p>\n

In the early 1990s, the Economist invented the \u201cR-Word Index\u201d to count the number of stories in newspapers that mention \u201crecession\u201d and used it to call the start of US recessions in 1990, 2001 and 2007. Google Trends is seen as a similar measure. Searches for \u201crecession\u201d spiked during periods defined as recessions by the National Bureau of Economic Research \u2014 and have been on the rise since June.<\/p>\n

Tech Slowdown<\/strong><\/p>\n

Apart from federal labor reports, Bloomberg has been tracking tech companies commenting on hiring slowdowns \u2014 a number that has been steadily increasing in recent months. Last week, Amazon said it had cut 100,000 jobs in the quarter and has been adding jobs at the slowest rate since 2019. Meta Platforms Inc chief executive officer Mark Zuckerberg told employees that he\u2019s anticipating one of the worst downturns in recent history.<\/p>\n

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Read: South Africa\u2019s best-performing bank right now is going big on renewable energy<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

After two quarters of contracting gross domestic product in the US, a debate has raged across Wall Street and Washington about when the country will be in a recession \u2014 and whether we’re already in one.<\/p>\n","protected":false},"author":59,"featured_media":474750,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26,11544],"class_list":["post-612905","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline","tag-morningstar"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/612905","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=612905"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/612905\/revisions"}],"predecessor-version":[{"id":612919,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/612905\/revisions\/612919"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/474750"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=612905"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=612905"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=612905"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}