What Beauty Sales Are Telling Us About The Economy

Lipstick Lessons

Have you heard of the “lipstick index” before? You read that right, beauty sales are their own economic indicator.

The term was popularized by Estée Lauder (EL) heir Leonard Lauder, to highlight the unusual inverse connection between the economy and beauty sales: When the economy slows, sales of little luxuries accelerate, as consumers look for smaller ways to treat themselves while paring bigger purchases.

So what is the lipstick index telling us today?

Beauty Boom

The prestige beauty market, which encompasses higher quality (and higher priced) products, has shown remarkable resilience across age and income, according to Overeon, a cosmetics collective that owns brands like BareMinerals and Laura Mercier. The market segment grew 9% in the first quarter of 2024, according to consumer insights firm Circana , while mass beauty sales added just 2%.

Maybe it’s the pandemic-era shift toward self-care, a preference for higher-quality products that reflect consumers’ values, or the growing role of social media influencers in beauty sales. But with the lipstick index in mind, could it be a sign of consumers cutting back elsewhere?

Spending Slowdown

The U.S. economy is still doing well by many metrics, though the pace of growth has been slowing. In the first three months of the year, U.S. GDP has expanded at an annualized rate of 1.3%, per the latest estimate from the Commerce Department, down from 1.6% in an initial estimate.

Consumer spending is the most important puzzle piece to the U.S. economy, and the recent revision was in part down to slower consumer spending. Now economists are looking for indicators if this slowdown is continuing in Q2. But they will look at more than just lipstick sales to find an answer. In April, the Census’ retail sales report showed spending was unchanged from March, and while the pace of inflation continued to cool, prices are still going up.

Time will tell if the economy is slowing down further — growing lipstick sales or not.

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