Can watching the market for sex toys help economists predict a recession?
Economists at their most playful like to find interesting ways to watch the market for signs of an impending economic downturn. After we get tired of watching inventories and production capacity, we turn to other leading indicators such as hamburger sales and whether or not donut shops are moving into downtown cores.
One of the most famous leading indicators of a recession is lipstick sales. Leonard Lauder, who was Chief Executive of the cosmetics company Estee Lauder until 1999, observed that in the lead up to a recession lipstick sales tend to increase. It turns out that an inexpensive way to make a girl feel good is a fun way for economists to forecast hard economic times.
Market research in 2009 found that sales of lubricants and sexual-enhancement devices were rocketing in the recession. The argument for this surge in sales of sexual aids sounds much like the argument made for lipstick; people need a cheap way to feel good in hard times (either that or they need a way to get hard in hard times).
The real test as to whether or not this market is a good indicator of economic activity will be revealed now that we are in a recovery. If the sales of his-and-her gels and vibrators go limp over the next year then I think we have a winner.
Maybe then we should ask The Economist to start reporting on the sex toy and lubricant markets. After all, they seem to share my belief that being informed can be fun.
If you enjoy this post, you may also be interested in a previous post An Economic Index for Sex?