Is Britain about to hit another recession? Is another global financial crash about to happen? Are we about to enter a period of economic boom? Shall I save or spend?
Questions like these keep experts, politicians, think tanks, and economists, in full-time jobs.
However, you don’t always have to rely on the experts to tell how the economy is doing. There are some easy signs that anyone can look out for.
In this article, you will learn some top tips to tell if the country is about to hit a recession.
Before we start, let’s ask: what is a recession?
According to the Oxford English Dictionary, a recession is a “difficult time for the economy of a country, when there is less trade and industrial activity than usual and more people are unemployed”.
For many experts, a recession is identified by a fall in Gross Domestic Product (GDP) — the sum of all economic activity in a country — in two successive quarters.
The opposite of a recession is economic boom, where the economy grows, jobs are plentiful and the market brings high returns to investors.
Now the technical stuff is over, let’s get to the unusual indicators to tell if we are in a recession or an economic boom.
Even if you are not an economics expert there are some easy signs you can look out for to tell if your country is about to hit a recession. Observing your friends and family, and the landscape around, can tell you a lot.
For example, there’s the important ‘Leading Lipstick Indicator’, a phrase coined by Leonard Lauder, chairman of Estee Lauder. In 2001 he said that in tough economic times women buy more lipsticks as they’re little affordable luxuries they can turn to to cheer them up. So, the theory goes, the more lipsticks that are sold, the deeper the recession.
Men’s underwear is another unusual way to tell how the country’s finances are doing. According to former Fed Chairman Alan Greenspan, the ‘Men’s Underwear Index’ is an unusual, yet reliable, economic indicator. According to the theory, underwear is one of the first things men stop buying in a recession. And when things pick up, men go pant shopping.
For women, it’s the hemline index. First suggested in 1925 by George Taylor, of the Wharton School of Business, the theory goes that skirt hemlines are higher when the economy is performing better. For instance, short skirts were the rage in the nineties during the tech bubble.
In the 1970s, on the other hand, when the economy was so depressed it could only get out of bed three days a week, the maxi-skirt was in, covering legs almost to the ankles.
When times are hard, people don’t have the money to dine out at Michelin-starred restaurants. However, fast food is a much more affordable treat. For instance, in the run up to the Brexit referendum, when most businesses were cutting back, McDonalds announced it was creating 5,000 jobs and investing £600m.
Similar to the last point, as people struggle to make ends meet, nights out on the town can be an expensive way to socialise. As such, people tend to ditch the bar during times of recession and invite friends to their homes for drinks. So, if your Saturday night invites are all house parties and home movie nights, it could spell bad news for the economy.
During the last recession the Heritage Lottery Fund, the charitable arm of the National lottery, reported a cash bonanza for schemes to upgrade old castles as the nation attempted to gamble itself out of the economic crisis. Figures show that between 2009-10 — the peak of the last recession — lottery ticket and scratchcard sales increased by 11.6 percent in the UK.
If you walk along your high street and see shop after shop vacant or, worse, boarded-up, it’s obvious business is not going well for most people. However, if you start to notice new shops opening, and new development happening, you could soon be waking up in boom town. Cranes on the horizon can be a good sign too.
Apparently we have droopier eyes in a recession too because we don’t get as much sleep during the worrying times and also because our ability and willingness to throw thousands of pounds into cosmetic surgery wanes. As soon as the economy brightens up, though, so do our eyelids.
Blind dates go up when the economy is down as we seek solace in romance. Not surprisingly, romantic novels also do well. As soon as more money comes in though, it’s ‘so-long soldier, I’ve got my cash to keep me warm’ and more of us are young, free and single again.