Fashion Forecasters or False Indicators?

Economic uncertainties, financial anxieties and social media have led to an uptick of deeming anything and everything — from shopping habits to groceries to pop culture — as a recession indicator. 

Is a return to natural hair color, the popularity of ramen and Buldak noodles or a greater interest in lip products a recession indicator? 

Two particular and popular indicators in fashion — the hemline index theory and the lipstick effect — are often cited as examples of how style reflects the economy. 

The hemline index theory states shorter skirts are indicative of a good economic standing, while longer hemlines supposedly suggest a declining economy. The theory can be traced back to the 1920s, when Wharton economist George Taylor inspected the growth of the hosiery industry. 

Taylor cited shorter skirts as the reason women were buying more stockings. The theory appears to align with certain decades, including the miniskirt craze of the 1960s, which coincided with high employment and an economic boom. 

However, in the World War II postwar era, longer skirts indicated signs of prosperity, as more fabric used was a display of affluence.

Going in hand with the hemline index, the lipstick effect proposes that during times of economic crisis and instability, consumers turn to buying smaller luxury items — such as high-end lipstick — instead of sizable purchases like luxury cars, large homes or resort vacations. 

The effect is not as historic as the hemline index theory. Coined by an Estée Lauder executive in 2001, there is no scientific evidence proving its reliability. 

During the COVID-19 pandemic, for example, the necessity of face masks led to a decline in lipstick sales, alongside the general economic downturn. 

Economic disasters, namely the Great Depression and the 2008 recession, have also been used to validate these supposed fashion-based indicators, revealing a change in consumer behavior.

Since the Great Depression immediately followed the Roaring ’20s, fashion was heavily influenced by flapper girls and Hollywood icons including Greta Garbo, Marlene Dietrich and Bette Davis. 

While the 1920s preferred a flatter, boyish figure, the 1930s preferred a curvier, more “feminine” look. Per the hemline index theory, though not statistically proven, skirt lengths did drop. 

Meanwhile, the beauty and cosmetic industry rose as a whole, contrary to the lipstick effect, allowing women to look like their favorite Hollywood icons at a lower cost. 

A bohemian aesthetic rose during the 2008 recession, bringing with it a popularity of affordable, handmade clothing. Knitted, chunky sweaters were all the rage. 

During this era, consumers once again prioritized affordability and practicality, and gaudy displays of wealth and luxury were often looked down upon and viewed with skepticism.

Neither the hemline index theory nor the lipstick effect has any solid statistical or economic evidence backing them — they are likely a product of selection bias, often cited as an explanation of certain historical trends.

In reality, these theories do not always apply because they overlook the broader cultural and industrial picture. There is not one true fashion indicator of economic instability; instead, trends arise from social and cultural changes, consumer psychology and technology and marketing from brands. 

Rather than taking these theories as truthful fashion indicators of economic instability or accurate readings of consumer psychology, we can find their appeal as a playful microscope, using them to spot patterns in fashion and to think about social and cultural changes.