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Lipstick Indicator/Lipstick Effect

This bearish indicator is based on the idea that when individuals feel uncertain about the future, they turn to less-expensive luxuries, most notably vanity items such as lipstick. The trend suggests that lipstick sales increase during a recession or times of economic uncertainty. The use of lipstick has also been suggested to be a “mood enhancer,” which would understandably function to lift spirits during depressing times.

According to the New York Times, this term was coined by Leonard Lauder, the chairman of Estee Lauder, who noticed a surge in lipstick sales in the downturn following the September 11 attacks. How has this indicator held up in 2008? The New York Times reported in November that sales of cosmetics had risen more than 40 percent in the last months of 2008 with other sources reporting cosmetics sales up across the board.

Photo: Palila Borleans