Lipstick, stamps and men's underwear: Track the prices of these everyday items as leading recession and inflation indicators

·5 min read

Most people don’t need headlines to tell them inflation is surging and the odds of a recession are rising. For many of us, certain telltale signs really bring home how bad it’s getting.

Almost everyone notices how much more it costs to fill our tanks at the gas station, with a gallon of regular unleaded hitting a record-high national average of $5.01 in June. They are also likely familiar with how much more groceries cost, with staples up 11.9% in the 12 months ending May.

After all, May consumer prices accelerated by 8.6%, the fastest pace in 40 years, led by housing, gas, and food prices.

But price increases are everywhere: airfares, used cars and trucks, new cars and trucks, medical care, household furnishings, recreation, and clothes – they almost all rose, according to the Bureau of Labor Statistics.

Last quarter's GDP report revealed the economy shrunk by 1.5%. Even though one negative quarter of GDP doesn't mean we're in a recession, it's starting to feel more like one with the S&P 500 stock index entering a bear market and layoffs across tech rising.

There are major indicators the government follows, sure. Here we offer some smaller, everyday items people notice are being walloped by inflation:

Haircut trends

“Economists closely follow this price because a haircut is in large part the same service today as it was 10, 20, or 50 years ago, and is similar across countries,” Bill Adams, chief economist for Comerica Bank, wrote in a commentary after the May consumer price index report. “So, this price is a good shorthand for the trend in overall inflation.”

What happened to haircuts in May? The price rose 0.5% month-over-month in May and 6.2% over the year.

What does that say about inflation?

“Consistent with the rest of the report, it shows that inflation failed to moderate in May and is way too high,” Adams said.

Randall Vaughn, who is the founder and owner of Classic INTOWN Barbershop & Men Spa in downtown Atlanta, raised the price of a standard cut from $35 to $45 in May. That was the first time Vaughn, who is also a master barber, raised prices in almost two years.

Randall Vaughn, barber and owner of Classic INTOWN, a barber shop located in downtown Atlanta, raised the price of haircuts by $10 in May.
Randall Vaughn, barber and owner of Classic INTOWN, a barber shop located in downtown Atlanta, raised the price of haircuts by $10 in May.

He's planning to increase prices for all products and services by an additional 10% later this year. This comes as rent for his shop and the price of crucial supplies like blades "have gone up considerably."

But he and three other barbers he works with haven't lost any customers as a result of the price increase, Vaughn told USA TODAY. That's primarily "because we have such a loyal customer base," he added since the shop has been around for 30 years.

Stick with the postage stamp

“Personally, I love tracking the price of first-class stamps,” Michael Ashton, managing principal at Enduring Investments, wrote in an email. “It turns out that these track inflation pretty darn well.”

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At the end of 1981, a first-class stamp was 20 cents. The post office is going to increase stamps to 60 cents in July. That’s a 200% increase. And from the end of 1981 to today, the core consumer price index, which excludes volatile food and energy prices, has increased 214%, he said. “Not bad!” he said, adding that “the “forever” stamp is essentially a perpetual TIPS bond!”

When you pay the current first-class postage price for a forever stamp  you can use it any time without adding more postage, no matter what the prevailing cost of a first-class stamp at the time.

TIPS, or Treasury Inflation-Protected Securities, are government bonds whose principal is adjusted twice a year for inflation. TIPS are sometimes used in a portfolio to hedge against inflation.

Pay attention to men's underwear

If you're worried the economy is in a recession or will slip into one, keep an eye on men's underwear.

At least that's what former Federal Reserve Chairman Alan Greenspan said he did.

The logic is as follows: In good times, men don't think twice about replacing their underwear when it  is worn out. But when they have to tighten their belts in recessions, they'd prefer to wear underwear with holes in it than buy a new pair.

This theory held up during the Great Recession. At the height of the economic downturn in 2009, sales plummeted and eventually started to recover in 2011.

Hanes and Calvin Klein, two of the most popular men's underwear brands, didn't respond to requests for comment regarding current sales.

The lipstick index

During recessions when people are generally feeling worse about themselves because of the state of the economy, women, in particular, tend to buy more lipstick.

"At times when discretionary income is scarce and splurging on expensive nonessential goods is not an option, buying lipstick could be a way of escapism," Natallia Bambiza, makeup and beauty analyst for the NPD Group, wrote in a May report.

"Priced significantly lower than designer accessories, apparel, or jewelry, a 'nice-to-have' lipstick plays the role of 'affordable luxury.'"

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Former Estée Lauder CEO Leonard Lauder coined the term "lipstick index" in 2001 toward the end of the dot-com bubble-induced recession when he made the connection between lipstick sales and recessions.

The theory, however, didn't hold up during the pandemic-induced recession mainly because people were staying home or wearing face coverings outside. Now it's being challenged even further because it's harder to discern whether people are buying lipstick because they're going out more or to cope with economic hardship.

This article originally appeared on USA TODAY: Is a recession coming in 2022? Has inflation peaked? How to tell