'Recession indicators' flood TikTok in US: Labubus, lipsticks and low-rise jeans trigger panic

Economic Times

3 days ago

AP
To be in a recession, the economy has to have two consecutive quarters, or six months, of negative GDP growth
The term 'recession indicator' is trending all over social media in the US. Have you ever wondered what do a Labubu toy and the US Treasury yield curve have in common? For Gen Z, everything from the popularity of Labubus to listening to emo music to lipstick sales are a possible indicator of a recession.
From Lady Gaga topping the charts to fashionistas stepping out in low-rise jeans and coke bottles with names-- all these are just few hints that social media users see as a sign of recession in US.
TikTok is brimming with what users are calling modern-day recession indicators. Among the most talked-about are the hemline index—the theory that skirt lengths tend to get longer as economic downturns loom—and the lipstick index, which links spikes in lipstick purchases or Google searches to the onset of past recessions.
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'A huge recession indicator nobody is talking about, ready? The club is only getting stronger,' one TikTok post said, reports Seattle Times. 'We have an event here in Seattle at Cha Cha Lounge (where) they throw Latin night on a Wednesday and it gets packed.' 'Five things trending this summer that are actually just recession indicators,' one TikTok creator says in a video, going on to point to short nails, minimalism, people quitting fake tanning and a return to natural hair colors as signs of a recession.
Some posts suggested that signs of cost-cutting or anything evoking the 2007–2009 era are indicators that the US economy may be headed for a downturn. But experts don't share the same views and assessment as actual economic indicators hold steady despite clouds of uncertainty. Economists use metrics to predict recessions, such as the unemployment rate, now at 4.1%, and weekly unemployment insurance claims.
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The US real gross domestic product increased at a 3% annual rate from April through June, an improvement after contracting 0.5% in the first quarter, according to an advance estimate from the U.S. Bureau of Economic Analysis released this week. To be in a recession, the economy has to have two consecutive quarters, or six months, of negative GDP growth, economist Mark Gertler told The Seattle Times. This means, currently the US economy is not in a recession.
The last time the National Bureau of Economic Research, where Gertler works, declared a recession was because of the pandemic. It was the shortest recession in US history, lasting from February to April 2020. Before that, the Great Recession, from 2007 to 2009, was the worst economic downturn in decades, and its impact reverberated through early 2000s culture. 'It could be that Lady Gaga concerts were correlated over a certain period,' Gertler was quoted as saying by Seattle Times. 'But if there's not a fundamental economic reason for that, the correlation will likely break down over time.' The Great Recession was a 'different animal' Gertler said, triggered by a bursting of the housing market bubble. When examining actual recession predictors, the US economy is holding fairly steady.
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Tara Sinclair, chair of George Washington University's Economics Department and an economic forecasting researcher, told NBC Washington while looking for recession indicators may seem strange, some have an underlying validity.'There would be reasons to think that culturally we could come up with a theoretical argument, for example, for the lipstick index, this idea that when you feel like you can't buy a whole new outfit, but maybe you can just buy yourself a new shade of lipstick, that that might somewhat be indicative of people's sense of personal finances,' she said.'I think what's more important is tracking that people are talking about it more. And in general, if people are talking about concerns about the economy, then the next step is for them to pull back on their spending. and if they pull back on their spending, then that can create a self-created recession," she said.
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Labubus are actually recession indicators? 'I mean, it could be that we all get ourselves a little Labubu and if that's all we're getting everybody for Christmas this year, that's probably a signal that we've cut back a lot on our spending by Christmas," Sinclair said. 'Unless, of course, you're getting one of those collectible ones that cost thousands of dollars.'Economists rely on several key indicators to assess the nation's economic health—one of the most significant being the unemployment rate, which currently sits at around 4.1%. That figure has remained relatively stable over the past few years.Consumer spending is another critical measure. A noticeable drop in purchases of nonessential items can be an early warning sign of an impending recession, according to Ana Espinola-Arredondo, an economist and professor at Washington State University.