Have you been in a TikTok or Instagram comment section lately and seen comments like, “This is such a recession indicator”? Maybe it’s on a post about the sudden return of long skirts, or even Lady Gaga teasing new pop music. Believe it or not, these moments are often jokingly tied to what’s called the economic cycle: the economy’s version of a vibe shift.
So let’s break that down. The economy goes through four main phases that repeat over and over again: expansion, peak, contraction, and recession (followed eventually by recovery). Think of it as the economic version of a mood cycle or season cycle, continuing to change.
1. Expansion
This is when the economy is thriving. Jobs are plentiful, people are spending money, businesses are doing well, and the stock market tends to rise. Confidence is high, and you’ll usually see people making bigger purchases: cars, vacations, or investing in homes. Basically, everything is good and people are happy!
2. Peak
This is the top of the wave, the point where things can’t get much better. Growth starts to slow down, but hasn’t fully stopped yet. Prices might start to rise more quickly (hello, inflation), and economists begin looking for signs that a downturn is coming. The main thing to remember here is that these fluctuations are infinite every peak is matched with a downfall.
3. Contraction
Also called the slowdown, this is when the economy begins to cool off. Businesses earn less, layoffs may start, and consumer confidence begins to dip. People pull back on spending, and growth slows. It’s like when your phone goes into low-power mode, everything still works, just… slower.
4. Recession
This is the low point. Jobs are lost, companies close, the stock market can take a hit, and everyday life gets financially harder for a lot of people. But, good news, it doesn’t last forever. Recessions are always followed by recoveries, even if the timing can feel uncertain. Circling back to the idea that at the end of the day it is all a loop.
But Wait… Can Skirt Length Predict All This?
While digging into all of this, I came across some surprising (and surprisingly popular) economic theories, for example, the Lipstick Index and the Hemline Index.
The Lipstick Index claims that during hard times, women buy more lipstick as a small luxury. And there was data to support this back in 2001 and again around 2008. But in 2020? Not so much. Lipstick sales dropped big time because, well, we were all wearing masks. This posed the question of how truly reliable this index is. In my opinion, rather than having a direct correlation, it may just be somewhat influenced by economic downfalls.
Now let’s talk about the Hemline Index. This theory suggests that the length of women’s skirts reflects the economy; shorter skirts are in fashion during boom times, and longer skirts in recessions. It started gaining attention back in the 1920’s and has popped up in conversation ever since. But the truth is, fashion today moves way faster and is influenced by TikTok trends, celebrity styles, and even environmental movements. So, before the times of social media, I completely agree it could have been a reliable way of predicting economic twists and turns, but fast fashion has thrown off the ability for it to accurately guess economic health. So while it’s fun to joke that maxi skirts mean a recession, it’s probably not a reliable economic indicator anymore. And I don’t know about you, I think it’s really cool how everyday things like fashion could have at times predicted how much bread would be!
Closing Comments
So while the US is not in a recession currently, some indicators point to it happening sometime in the next few years. However things like this are almost impossible to predict, even if you heavily study the most in fashion skirt lengths or the trendiest lip stick to buy. Have you heard of any other interesting or unexpected recession indicators? If so, leave them down below! I would love to hear about more of them!
Sincerely,
Sophia