Which Way the Economy? Read Her Lips.

When I was in college, a friend of mine who went on to be quite successful in direct marketing once tossed out a randomly offered humorous remark while we were stuck on a parkway: "They say that traffic jams actually increase muffin sales." Well, it was side splitting at the time.

Now I learn that there may be truth in such seemingly bizarre connections in human behavior. Apparently, there is a leading economic indicator called the lipstick index or the lipstick effect. According to this theory:

...a consumer turns to less expensive indulgences, such as lipstick, when she (or he) [?] feels less than confident about the future. Therefore, lipstick sales tend to increase during times of economic uncertainty or a recession.

This term was coined by Leonard Lauder (chairman of Estee Lauder), who consistently found that during tough economic times, his lipstick sales went up. Believe it or not, the indicator has been quite a reliable signal of consumer attitudes over the years. For example, in the months following the September 11 terrorist attacks, lipstick sales doubled. (Investopedia)

So how are lipstick sales these days? Read "Hard Times, But Your Lips Look Great" in today's New York Times.