Does data even stand a chance against drip?

When Lababus—those ostentatiously grotesque plushies—started colonising street style, I had a hunch that fashion was trying to tell us something. Not just about taste or the lack of it, but about the times. Fashion mirrors our society’s fears, fantasies, and finances. Finances? Yes. But what can fashion and finance possibly have in common, apart from making a nice alliteration? The two may seem like unlikely bedfellows, but fashion has long been credited with a prescient eye for economic shifts and looming recessions.

“Fashion consumption—luxury goods consumption, in particular—is an interesting barometer to gauge people’s trust in the future. People’s behaviour often shifts before things are reflected in official data. This is what the economist John Maynard Keynes called “animal spirits”—psychological and emotional factors that influence economic decision-making, particularly in investment and consumption,” explains Claudia D’Arpizio, Partner at Bain & Company, Milan, and lead author of Bain’s annual Luxury Goods Report.

Popularised by economist George Taylor in the 1920s, the “Hemline Index”—which establishes an inverse relation between skirt hemlines and the stock market—is one of the most famous examples of fashion’s prophetic potential.

“Taylor’s research on the 1920s American hosiery industry linked economic booms to women’s ability to buy silk stockings and their confidence in showing their legs. Over time, it has evolved to connect skirt length with the economy at large,” says Alice Janssens, Fashion Researcher at the University of Southampton. During the Great Depression of 1929, the hemlines grew down to the ground as the stock markets fell. In 1947, when Christian Dior debuted its fashion show with long, voluminous skirts, it seemed to have forerun the economic tension of 1949, the first post-World War II recession. Inversely, the 1960s were defined by the mini-skirt fashion owing to technological advancements, cultural progress, and an overall healthy economy.

Another popularly known recession indicator is the “Lipstick Index”. Coined by Leonard Lauder, then chairman of Estée Lauder, during the 2001 recession, the hypothesis suggests that lipstick sales boost in times of economic hardships as people resort to smaller, affordable luxuries. Lauder first spotted this after 9/11—lipstick sales spiked amid tragedy. He noticed the same pattern repeated during the 2008 recession, strengthening his premise.

History is replete with instances where fashion has foreseen economic mayhem before anything else. And history, as they say, repeats itself.

MECHANICS BEHIND THE MAGIC

“Luxury expenditures directly reflect consumer confidence, which in turn becomes an indicator of the economic situation,” explains D’Arpizio. Luxury brands serve as early warning systems through their affluent customer base—when the sentiment of such luxury consumers is pessimistic, a pullback in spending is observed, which causes a decline in luxury sales. When fashion becomes less flamboyant—muted colours on the runways, the rise of business casuals—it often indicates lower consumer confidence, making it a sign of a possibly struggling economy.

“Luxury fashion is the first to indicate economic havoc as opposed to fast fashion, which is mostly resilient to such shifts,” says D’Arpizio. When the wealthy, despite having money, start to save, it depicts a lack of confidence in the economy. On the other hand, a lot of trickling down of consumers happens from luxury fashion to inexpensive forms of fashion, making fast fashion immune to such economic downturns. “Likewise, jewellery is resistant to fiscal declines as people see it as an investment.”

NOTES IN PRESENT TENSE

In 2022, a recession loomed as an aftermath of the Covid-19 pandemic; however, lipstick sales dropped, challenging the “Lipstick Index” and revealing the evolving modern consumer behaviour. So what are the recession indicators of today?

“While beauty overall is an indulgent category, a strong shift from make-up to skincare can be considered a sign. I’ll maybe substitute the lipstick effect with skincare in the present day,” D’Arpizio tells Bazaar India. This is because people see skincare as an investment in oneself, contrary to make-up, which is seen as an indulgence, she reasons.

D’Arpizio’s observation isn’t just anecdotal. The McKinsey State of Beauty 2025 study reveals that certain skincare products “that address key concerns or have meaningful performance differentiation” are considered splurge-worthy by today’s consumers in an uncertain economy, ridden with tariffs and wars.

Another category that’s quite telling is men’s watches. Historically, it has behaved as a highly cyclical segment. “Men tend to react more reasonably to economic signals—if they anticipate receiving a bonus, they might buy a watch. If not, they postpone it. That makes watches a reliable early indicator,” deciphers D’Arpizio.

Colour palettes offer one of the clearest examples of this phenomenon. Economic uncertainty typically correlates with a shift toward neutral tones—blacks, greys, beiges, and navy blues—while bright colours and bold patterns decline in popularity. Overall, a retreat to basics—neutral colours and minimalism—can indicate the tight hands of the buyers, revealing a trust deficit in the economy.

While reticent to link a fashion trend purely to economics, Janssens believes the growth in “quiet luxury purchases, the rise of Guochao in the Chinese market, the popularity of thrifting and resale markets, and perhaps even medieval core trend,” are indicative of our socio-economic, cultural, and political milieu as a whole. Such indicators differ by geography, too. “In mature luxury markets [like the US], economic downturns often push buyers away from conspicuous goods,” explains Janssens. “In India and Southeast Asia, conspicuous consumption may persist due to the status value for the growing middle class.”

We’re not in a total collapse, though—while the market has softened and we are seeing American and Chinese consumers trying to save, which is rare—brands are slowing price hikes, and a modest recovery in volume may follow, D’Arpizio remarks.

THE OMNIPRESENT GEN Z OMENS

Gen Z has also picked up on the recession prophecy phenomenon, perhaps more than one should have. According to the TikTok generation, anything and everything—inflated egg prices, Lady Gaga’s return to pop music, strip clubs—is a bad omen. “Recession Core” and “Recession Fashion” have become online meme trends with #RecessionIndicator flooding social media.

The internet had almost convinced me that Labubus are devils ringing knell to the economy’s demise. Although the broader opinion on Labubus remains divided, D’Arpizio seems to disagree. “I don’t think Labubus are a serious recession indicator. While it is true that people seek pleasure in affordable, quieter luxuries during such times, Labubus are more of an influencer-led phenomenon. They are merely rare collectables that people want to have.”

Janssens says fashion purchases should not be relied on as the only signal in today’s micro-trend times. “Discretionary spending is part of a broader group of economic downturn indicators, including shifts in the stock market, lending standards and unemployment,” she warns. “However, fashion signals can add a vitality and innovation in a way that data—often based on historical records—can’t.”

The desire to foretell the future is innately human. These indexes and indicators may not be perfect predictors, but the impulse behind them—the recognition that fashion reflects deeper currents in human behaviour—remains eternal. Fashion may be a yardstick for the zeitgeist, not a gospel. But isn’t that all we need? Well, that—and maybe a Labubu too.

Lead Image: Courtesy Getty Images

This article first appeared in the August-September 2025 issue of Harper's Bazaar India 

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