Throughout periods of economic downturn, economists search for warning signs of recession based on consumer habits. As the anxiety of a recession in the country looms, some suggest that the sale of one particular cosmetic product could reveal where the economy may be within the next year.
Originally coined by Leonard Lauder in 2001, the “Lipstick Index” suggests that as the state of the economy becomes more uncertain, consumers spend more money on affordable luxuries, such as lipstick, rather than making larger purchases. While the legitimacy of the theory has been debated amongst economists, JP Morgan Wealth Management explained that Lauder’s concept may not be that far off.
“With inflation still high, buying a home, purchasing a new car or going on vacation has become cost-prohibitive for countless American households – but buying a $30 Dior lip plumper hasn’t. Plus, affordable luxury purchases can have a positive psychological impact during stressful times – they can make you feel and look better in a period marked with stress and anxiety.” – JP Morgan Wealth Management
The company also highlighted that in situations where prices are inflated, an increase in the cost of an already inexpensive product feels more absorbable compared to the price of a more expensive item.
When Lauder first introduced the Lipstick Index, the U.S. economy was nearing a downturn, but examples of the idea are demonstrated throughout several periods of economic depressions.
For example, the product gained popularity in the early 1920s through the Great Depression, a time in which cosmetic retailers saw an unexpected boost in sales. Similarly, Google Trends indicates that searches for “lipstick” reached a peak in September 2008– the middle of the Great Recession.
However, the index’s pattern does not always repeat itself. Forbes reported in 2021 that sales for lip products dropped by 15% in 2020, a time that should have seen a substantial increase in sales, according to the Lipstick Index. The publication credited the anomaly to the increased use of masks over the course of the pandemic.
Still, from June to September 2021, Google Trends reported the largest spike in interest for lip products since 2008.
Global Market Insights reported in 2023 that the market size for lip products was valued at over $9.1 billion and was expected to grow by a compound annual rate of 4.8% from 2024 to 2032.
The sale of lipstick products for the first quarter of 2025 are unclear. Local branches for cosmetic retailers Sephora and Ulta Beauty declined to share sales data with the Vanguard, but both stores provided a list of their most shopped brands.
The most popular brands for lip products from both stores included Charlotte Tilbury and MAC. Both brands offer products beyond lipstick, and do not break down their annual profits by individual items. Still, Charlotte Tilbury reported record annual revenue in 2023, with a 23% increase in sales for the brand’s cosmetics. Meanwhile, MAC reports an annual turnover of $1 billion and ranks as one of the top three makeup brands globally.
