Former Fed Chairman Alan Greenspan is a fan of the men’s underwear indicator. The theory: men extend the lives of their undershorts during tough times to save money.And when demand falls, prices usually fall.
But there’s something weird going on with women’s underwear.
The New York Times’ Floyd Norris was digging through some inflation data when he unearthed an interesting nugget.
Women’s underwear prices are up 32.5% since December 2007, the beginning of the last recession. That’s an annual underwear inflation rate of 7.8%. Prices are far outpacing CPI and even women’s outerwear.
Photo: The New York Times
Underwear cost inflation doesn’t sufficiently explain the higher prices because cotton prices are actually lower.
Perhaps this unexpected trend can be better explained by Leonard Lauder’s lipstick indicator, which suggests women turn to low cost indulgences during tough times. An expensive brassiere will cost less than an expensive handbag. Perhaps Victoria’s secret is that she’s taking advantage of this behaviour…
Don’t Miss: The 15 Most BIZARRE Economic Indicators