What Beauty Sales Are Telling Us About The Economy
By: Anneken Tappe · June 13, 2024 · Reading Time: 3 minutes
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.
Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS24061301