These unusual figures may need to be monitored

Completion of the world’s tallest buildings is said to be one less common indicator of an economic downturn. Pictured on April 3, 2022 is the Merdeka 118 tower in Malaysia, which was completed in late 2021 and is considered the second tallest skyscraper in the world.

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Not only bonds and stock markets can signal an economic downturn.

From the men’s underwear index to the hem index, there are also a number of more unconventional economic indicators that should be traced.

Fears of a recession have been growing recently. Investors are increasingly concerned that record high inflation amid the Russian-Ukrainian war combined with plans by the Federal Reserve to aggressively raise interest rates could slow economic growth.

This deepening sense of anxiety is reflected in the U.S. government bond market through what is known as the inversion of the yield curve that historically took place before the recession. Investors are selling short-term treasury bonds in favor of longer-term government debt, forcing 2-year bond yields to rise above 10-year levels.

However, economists emphasize that the inversion of bond yields is not a guarantee of recession. Indeed, this figure may appear two years before the economic downturn.

There are many other economic data that could signal a recession, including employment figures and consumer spending. Market observers also turned to more unusual economic health indicators.

Skyscraper Index

British economist Andrew Lawrence developed the so-called “skyscraper index” in 1999. This measure links the construction of the largest buildings in the world with the onset of the economic crisis.

In a 2012 interview with the nonprofit Council for Tall Buildings and Urban Environment, Lawrence said he looked back to the late 1800s and found a link between the completion of the world’s tallest buildings and the economic crisis.

Notable examples include the completion of the Chrysler and Empire State Buildings in New York during the Great Depression.

Lawrence explained that the completion of the construction of these skyscrapers “reduces the boom in construction.” However, he noted that it is not the tallest building, but if there is a “cluster” of these skyscrapers.

As for the newly built skyscrapers, the Merdeka 118 tower in Kuala Lump was completed in late 2021 and is the second tallest building in the world. New York’s Steinway Tower, considered the world’s slimmest skyscraper and one of the tallest in the Western Hemisphere, has also just been completed.

Index of men’s underwear

For former Federal Reserve Chairman Alan Greenspan it is the sale of male rabbits.

NPR correspondent Robert Krulwich said back in 2008, amid the global financial crisis, that Greenspan explained to him that since panties were one of the last items of clothing that men want to buy, it serves as a good indicator of when hard times are coming.

Greenspan reportedly said that sales of male rabbits are generally fairly steady, but a drop in sales indicates that men’s finances are so tight that they decide not to buy a replacement.

Hem index

The “Hem Index” emerged based on a dissertation in the 1920s by Wharton Business School economist George Taylor. The theory is that skirts become shorter when markets are on the rise, and longer during the downturn.

The economic growth of the 1920s and the emergence of knee-length skirts, as well as the emergence of mini-skirts in the 1960s amid increasing financial conditions were cited as examples in support of this theory.

However, questions often arose regarding his trust.

A study published in 2010 by the Econometric Institute of the Erasmus School of Economics in the Netherlands collected monthly data on hems from 1921 to 2009.

“The main conclusion is that the urban legend is true, but with a time lag of about three years,” – said the authors of the report.

Lipstick index

Estee Lauder chairman Leonard Lauder developed the “lipstick index” amid the 2001 economic downturn. He suggested that women would spend more on small luxuries, such as lipstick, as a decoy in difficult times.

This theory was untrue during the Covid-19 pandemic in 2020, when sales of cosmetics declined because consumers were restricted from staying home during blockades.

Russ Mold, director of investment research at AJ Bell, told CNBC by phone that while investors should not rely on these soft economic indicators indirectly, they “should always be monitored”.

Mold said that if the prices of luxury items such as champagne and art “go beyond” at the same time as stock prices, share buybacks, mergers and acquisitions and indebtedness, investors should start to feel more concerned.

“It’s kind of a bull market, behavior with happy days that will last forever just can’t last forever because it never happens,” he said.

Check: There are signs that a recession may be on the way. Here are some ways to protect your savings

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