00:00 Speaker A

Americans are souring on the economy with consumer confidence near record lows. The share of consumers who think a recession is coming in the next year rising to the highest level since May. A recession as defined by the National Bureau of Economic Research is a significant decline in economic activity that has spread across the economy and lasts more than a few months. Collecting that data takes a while, and with the government shut down, reports are not being released from that source right now. So we want to look at some less than traditional measures to watch.

00:32 Speaker A

Joining me now for that is Yahoo Finance Personal Finance reporter, Emma Ackerman. Hey, Emma.

00:35 Emma Ackerman

Hi.

00:36 Speaker A

So, where should we be looking? Usually we rely on the government for this stuff, but we also rely on a lot of other different sources. So where should we be looking?

00:46 Emma Ackerman

Of course. So there are some goofy and some less goofy sort of off-beat recession indicators that economists like to take a look at. One of the more reliable ones or one of the more trustworthy ones, I would say, um being cardboard box demand. Essentially, everything that we want or need comes to us or comes to the place we buy it from, um in a cardboard box, and it can sort of be an indicator of consumer spending and how strong that’s looking. Famously, it was something that Alan Greenspan liked to take a look at.

01:21 Emma Ackerman

That being said, consumer spending right now is pretty strong. Um but there are some warning signs that things could cool off if you take a look at cardboard box production. We’ve seen cardboard box makers cut back on production recently. We’ve even seen a few mills close this year and some of the steepest cuts since the great recession, actually. Um and one economist I spoke to noted that this is especially interesting right now given that this slowdown is happening right before the holiday shopping season when we would sort of expect things to ramp up.

01:29 Speaker A

Huh, interesting. Okay, so that is a more serious indicator. Now I’m going to go to one I think is less serious and this one’s been around for a while, the hemline indicator. In other words that where women’s skirts are trending is an indicator of the economy, right?

01:50 Emma Ackerman

Yeah, so I’m a I’m a fashion person. I care about fashion history. So this one is particularly interesting to me. Um it’s also just not true.

02:01 Speaker A

Oh, come on.

02:02 Emma Ackerman

Like, it’s it is true that fashion can get more conservative in times of an economic slowdown. Palettes may get more neutral, people may buy less, makes sense, right? But when it comes to hemlines, like the idea that shorts get skirter or sorry, skirts get shorter in times where the economy is doing well and skirts get longer when it’s not doing well, um, that’s just doesn’t hold up. Like right now we’re seeing that mini skirts are trending, right? Um, hearkening back to Y2K, which is when we also had a recession, right, with the dotcom bubble bursting. Um and longer skirts were trending uh pre-pandemic when the economy was doing pretty well.

02:37 Speaker A

Maybe it’s a counter, contrarian indicator. I don’t know. We’ll get think more about this. Um and then sticking sort of fashion adjacent, the lipstick index is something else that folks talk about, or lipstick indicator, I guess.

02:47 Emma Ackerman

Right. I think that this can hold a little bit of weight, but it’s perhaps more complicated than just lipstick. And so this theory came from like post 2001. Um, I think it was the CEO of Estee Lauder who said that essentially when the economy is in trouble, women buy lipstick as a little pick me up. Of course, people buy a lot of little things as a pick me up. Um, whether that’s lipstick, coffee, booboos, which some people have thought like those keychains may be a sign of a recession.

03:22 Emma Ackerman

But ultimately, what is a better indicator is restaurant traffic, which that could be considered a little treat. Um when we start to see people cut back on eating out, that could be a sign that they’re tightening their purse strings and we have seen that restaurant traffic has slowed a bit.

03:41 Speaker A

And then finally, and this one admittedly, I’d never thought to think of this. Um we’re in Halloween season, spooky season. Those big skeletons that I see on my neighbors’s lawns. That’s an indicator?

03:55 Emma Ackerman

So, this one came to me and again, I was looking for sort of like fun pop culture indicators. This one came to me from a state legislator in Iowa, who had sort of theorized to his constituents that maybe this could suggest an economic slowdown. He himself is a fan of Halloween decorations and so he keeps an eye on how those big skeletons which are called Skelly, um are fairing and he checked out when they started going up for sale, were they selling out because they had in prior years. He found that they were not.

04:36 Emma Ackerman

Of course, this could mean a multiple, this could have multiple explanations. One being that they could have just made more skeletons or everybody may already have their fill of skeletons and doesn’t eat another one. But one thing that did what did strike me as interesting is he pointed me toward a Facebook group for other fans of Halloween decorations and people were saying in the comments there that they were pulling back on Halloween spending just because things were a bit tighter this year. And of note, I did check to see if those giant skeletons were still in stock this morning and they are.

05:07 Speaker A

Well, I just did a quick search to see how much they cost. It seems like there’s a pretty big range depending on if whether the lights, the eyes light up, or they have different features, but we’re talking like in the 100s up into the multiple hundreds of dollars.

05:21 Emma Ackerman

Right. So this is I mean, it’s still a luxury product, right? Um the the legislator that I spoke to, what he had said is this is sort of a thing where it’s like it suggests you have excess money to throw around to make your kids happy. Like same thing is like, you know, taking your kids to a theme park for a day, maybe not, you know, if you have to include like flights and hotel and stuff like that. But it might be the sort of thing where if you can buy it to make your kids happy, you might. We’re seeing less of that.

05:51 Speaker A

Interesting. There’s one skelly in my town that the people dress up. It stays up year round.

05:59 Emma Ackerman

Year round?

05:59 Speaker A

Gets a back-to-school makeover, gets like a spring makeover. It’s fun.

06:05 Emma Ackerman

Maybe they could sell these year round.

06:07 Speaker A

Maybe maybe that’s an opportunity, right? Emma, thank you so much.