The media likes to advertise well-known metrics like unemployment and the 'lipstick index', but the truth is that no one really knows
As someone who keeps a close eye on the economy, I often bump into those strange metrics that people like to write about that, supposedly, unlock the secret of whether or not a recession is looming. Given what's going on, it's no surprise that they are back again. Just last week Bloomberg reported a cut in spending at hair stylists. There's the "lipstick index" – in tough economic times, women load up on lipstick instead of spending their dwindling funds on bigger-ticket items. Former Fed chair Alan Greenspan liked to follow men's underwear sales because hey, when times are tough, we guys are not willing to buy new shorts. There's little empirical evidence that any of these metrics mean anything. And it's next to impossible to gather accurate data to even measure these things. Are you getting a report from the men's underwear industry? No, I didn't think so. The media likes to advertise other well-known metrics like consumer sentiment, unemployment, and gross domestic product as indicators of a healthy or potentially sick economy. Economists like to look at bond yields, "beige book" data from the Federal Reserve, commodity prices, manufacturing activity, shipping indexes and other esoteric measurements to gauge where an economy is heading. But none of these are reliable predictors either. They oftentimes contradict each other or fail to reveal underlying problems (a housing collapse? junk bonds? tulips?) that are the trigger for a recession. The truth is that no one really knows. Economists and academics and pundits have been historically wrong too many times. Some like to manufacture needless panic so that they can get a spot on CNBC. Will it be tariffs this time? Higher inflation? An AI bubble? Your guess – their guess – is as good as any. Also, I don't…