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August 15, 2021

What are lipstick sales saying about the economy?

Officially, things are looking good for economic recovery.

There are four key metrics used to measure fiscal health, and each, industrial production, real income (income after adjusting for inflation), employment and real retail sales, are on the up-and-up, according to the latest numbers out of the U.S.

Unofficially, though, are gains quite so sure?

There is no shortage of bizarre economic indicators out there, but could there really be something to make of the latest reported earnings from … Estée Lauder?

Estée Lauder is the one of the largest cosmetics companies in the world, the maker of all things beauty.

*Bing: The weirdest economic indicators

And in the latest quarter, business is rosy for Estée Lauder; revenue grew ten per cent to $9.71 billion, including an earnings per share profit jump of 23 per cent.

So what could be fishy about that?

In fact, it was years ago that Leonard Lauder, the chairman emeritus of the cosmetics giant, came to surmise that good business for him might not mean good things for the overall economy.

In what’s now known as the “lipstick index,” Lauder argued that during difficult times women trim luxury spending but increase their consumption of cosmetics and makeup.

Agree of disagree – and most have disagreed – but Lauder has stuck by his indicator, using the early 2000s recession as his key sticking point.

Ladies: do you buy more, less or the same amount of beauty products during times of economic turmoil?



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

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