WJR Business Beat: Economic Well-Being Is Written in Lipstick (Episode 452)

Good morning, Paul! These are uncertain times to be sure. Are we in a recession? Are we not? Will inflation continue to rise at its current forward pace, or perhaps start to decline sometimes soon? When will this end? Will my business survive? The uncertainty can be crippling and so we find ourselves looking for telltale signs, looking for clues and answers to help us figure out where all this is headed.

Here’s one for you, Paul. Sometimes the answers to our seemingly most vexing questions can be found right under our noses, literally in this case, on our lips. That’s right. When it comes to determining consumer sentiment and spending behaviors look no further to what is known as the lipstick index.

Now, wait before I lose you, this is for real. You see the lipstick index tracks the sales of lipstick against the broader economic conditions. And, lo and behold, it’s been historically amazingly accurate. When lipstick sales surge, tough economic conditions track accordingly.

Why? Well, when the economy gets tough, people pull back on spending on bigger ticket items, but not on things like cosmetics and makeup that make us feel good. They provide a sense of comfort and delight at a relatively affordable price point. And, indeed, lipstick sales are spiking currently.

The NPD group reports that sales revenue in the first quarter of this year are up nearly 50% compared to the same period in 2021.

So, there it is, Paul. These lips don’t lie. That bright red you’re seeing more of these days might just be a harbinger of tough times ahead.

I’m Jeff Sloan, founder and CEO of startupnation.com, and that’s today’s Business Beat on the Great Voice of the Great Lakes, WJR.