Month: July 2022

Economists, investors, and analysts are always seeking clues that might predict a future market downturn. After all, there are trillions of dollars at stake in getting this correct. Some look at inverted yield curves (when short-term bond rates rise higher than long-term yields) and, rightly so, as this phenomenon has preceded nearly all recessions since the 1970s. But for the less cerebral and economically inclined among us, is there an alternative methodology that provides us the same power of prognostication? There may just be. 

Take the “underwear index” or the sale of men’s nether garments which tends to stay flat regardless of what the economy is doing. When sales droop, however, it suggests households “are so pinched that they are deciding not to replace underpants.” In fact, men’s underwear sales fell significantly from 2007 to 2009 during the Great Recession but inched higher to a more respectable level when the economy recovered in 2010. 

Another fun, albeit less meaty, measure of the economic downturn is the “Skyscraper Index” concocted by a former real estate analyst, who suggested an increase in very tall buildings happens as we are approaching a bust with a recession or economic crisis all but certain after a record-breaking tallest building is completed. History suggests this is true…we can point to the Empire State Building which was completed in 1930 just as the Great Depression hit, or the Sears Tower (now Willis Tower) and the World Trade Center’s Twin Towers completed in the 1970s during the infamous Jimmy Carter era plagued by rampant stagflation. Tall buildings are symbolic grandiose gestures that suggest a time of lofty ambitions tied to cheap credit, over-investment, and rampant speculation. 

Another silly, sexy non-scientific approach to predicting recessions is to look at dating site traffic as it tends to increase during economic busts as unemployed people have plenty of time to swipe left and right. During the Great Recession, the site Match enjoyed its best quarter ever and, not to scare you, but Bumble (another site for those with a robust libido but more flimsy finances) had better than expected earnings this quarter.  Inverted yield curve? Check. Cheap credit and rampant speculation? Hmmm…crypto, meme stocks, and NFTs anyone? I own them all…Yikes!

Goodkind, Nicole. “Is a Recession Coming? Alan Greenspan Says the Answer Is in Men’s Underwear | CNN Business.” CNN, 26 Mar. 2022, edition.cnn.com/2022/03/26/economy/recession-underwear-alan-greenspan/index.html.