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Are we poor yet?

Reading the signs of economic downturn

BY Lynn Cunningham

1919, The Skirt-Length Index: Anthropologist A.L. Kroeber publishes the ornately titled “On the Principle of Order in Civilization as Exemplifi ed by Changes of Fashion,” which argues, rather obliquely, that women’s fashions, including skirt length, are infl uenced by more than a designer’s vision. As Kroeber says, “[T]he principle of civilizational determinism scores as against individualist randomness.” Later, this idea is more clearly articulated as, “Skirts get longer in hard times, shorter in good times.” A look around on the street today will demonstrate how valid this notion is.

1929-1939, The Reality Index: After the great stock market crash of Black Tuesday—October 29, 1929—your bank account disappears along with your job, your house is foreclosed, to get around you hitch your Model A to a horse and your children wear clothes made out of fl our sacks.

1938, The Economic Indicators Index: The U.S. National Bureau of Economic Research publishes its first list of 12 leading (think canary in the mineshaft) gauges of financial health or malaise. These include average weekly hours worked by manufacturingsector employees, average weekly new claims for unemployment insurance and a change in consumer debt levels. More recently, this approach has been criticized for having no theoretical underpinning, not to mention that “American manufacturing” has become an oxymoron.

1999, The Foster Care Index: Four U.S. researchers explore the “provocation effect” of falling employment, specifi cally examining whether there’s a correlation between unemployment and children being put in foster care due to parental abuse or neglect. Counterintuitively, foster-care placements rise as unemployment does, until it reaches extremely high levels— 31,500 more unemployed than usual in Los Angeles, for example.

2001, The Lipstick Index: Contrary to some published reports, the Lipstick Index does not date to the Second World War. For one thing, its originator, Leonard Lauder was still a schoolboy at the time; for another, his parents’ company, Estée Lauder, wasn’t founded until 1946. Lauder junior actually posited his theory in the wake of 9/11, when he noted that “When things get tough, women buy lipstick” rather than pricier luxuries. This measurement has proved startlingly accurate.

2007, The Starbucks Index: A savvy Marketing Week columnist notes that the ubiquitous coffee vendor suffered a drop in customer traffic in its fourth quarter and wonders whether a “latte recession is indeed upon us?” Within seven months, the company announces it’s closing 600 U.S. outlets.

2008, The Abba Index: More obscure than the Lipstick Index—in fact, the sole adherent is London Sunday Times writer Richard Woods, who suggests that when markets meet their Waterloo, Abba’s popularity rises. Or you could just revert to the time-tested Reality Index. Your bank account is overdrawn, you’ve just been pink-slipped at work, your house is worth less than your mortgage and you’ve seen some Hummers hitched to horses on the streets.


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