Yves here. Richard Murphy calls out a recession indicator: women cutting back on their hair salon expenditures, here hair color. About 75% of American women dye their locks, making this a useful and close to real-time indicators. Roots begin to show again at ~5 weeks, but usually not too much until ~8 weeks after the last dye job.
I recall this pattern after the financial crisis; it was reported in the media (IIRC New York Magazine and likely others). At least in an appearance-fixated city like New York, the anecdata was that women were waiting longer before getting their hair colored than before, as opposed to giving up entirely (one of my friends points out that wigs are an option :-)).
Another belt-tightening reported then was cutbacks in visits to the dentist, not just for cosmetic treatments but also checkups, as well as doctor visits, although at least then, dentists seemed to take the bigger hit.
Obviously, discretionary consumer spending will see widespread reductions when times are cut, but the fact that medical maintenance and interventions are on that list is yet another US disgrace.
Other sensitive indicators then were restaurant visits. One can imagine coffee shops are even more vulnerable.
Of course, if declines are steep enough, that in turns intensifies a contraction, since owners will reduce staffing levels and may eventually have to shutter operations.
What items would you add to the list of “fast to get cut” expenses that can give an early warning of a downturn?
By Richard Murphy, Professor of Accounting Practice at Sheffield University Management School and a director of the Corporate Accountability Network. Originally published at Funding the Future.
As readers here will know, I am a fan of the idea of the ‘economics of walking about’, which is an idea created by my friend and occasional co-author, Danny Blanchflower.
In that context, this article from the Huffington Post was drawn to my attention:
The latest recession indicator? The number of “recession blondes” walking around with their natural roots showing.
President Donald Trump has played coy about the possibility of his tariffs causing a recession, telling NBC News earlier this month that any economic pain would just be part of a “transition period.” But hairdressers and others in the beauty industry are already seeing hints of a recession, as business tapers off, and clients let their hair grow long and uncolored.
Fashion has always been seen as an indicator of economic sentiment, most especially with regard to skirt hemline length. Short skirts are meant to indicate a strong, confident mood, and an upbeat economy, whilst long skirts are meant to indicate an economic downturn. Anybody who notices these things will have become aware of how long many skirts are at present.
Now, it seems, we have a new indicator based upon women having sufficient money available to afford to have their hair dyed. I am absolutely certain that the article is based upon fact: the trend that it notes appears to be happening.
It has long been known that in downturns, women do not give up on fashion, but adapt to their current circumstances. It was during the 1930s that the consequence was first described as the lipstick economy. When money disappeared for everything else, women bought lipsticks if there was no other item that they could afford to enhance their morale.
I am quite sure that the present display of undyed roots is an economic necessity, but fashion will adapt to embrace it, whilst some other items, which are cheaper than dyed hair, will still be afforded.
Economics is, if it is anything of worth, a study of human adaptability. That is why I find the version of it that I enjoy partaking in so fascinating.
