Leading Lipstick Indicator

  

Haters gonna hate, and consumers gonna consume. But what those consumers consume can change leading up to an economic recession, and that’s what the Leading Lipstick indicator is all about.

As it turns out, when consumers begin to lose confidence in the economy, they stop buying expensive luxury items—like shoes and yachts—and instead buy less-expensive luxury items…like lipstick.

It’s true, and while we can’t put an exact number to the indicator (there’s no differential equation we can apply to lipstick sales and consumer confidence), evidence suggests that lipstick sales often increase quite a bit when financial times are tough. That’s because lipstick is considered a “cheap luxury.” It’s something we can spring for even when we’re tightening the belt.

Financial analysts often look to the sale of lipstick and other cheap luxury items, like manicures and boxer briefs, to gauge how consumers are generally feeling about the economy.

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Finance: What is a Coincident Indicator?0 Views

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Finance Allah Shmoop what is a coincident indicator It's our

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coincident indicator Zahra Siri's of measures taken from different sectors

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or areas of a system that taken as a whole

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show What's currently going on in that system Like what's

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coincidence What's happening at the same time I think of

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them as displays on your fitbit that air telling you

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your heart rate respiration blood pressure and oxygen level right

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now like when you're ten minutes into your thirty minute

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run or painting So let's say that as you're walking

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into the living room from the kitchen you just realize

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your sock is suddenly wet and cold and that there's

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a strange smell that vaguely resembles cat food but could

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be something way worse And you see the cats linking

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behind the couch as if she did something wrong You

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know we're looking at you Todd These air all coincident

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indicators Riel Time up to the minute information from a

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variety of sources that point to an increased trend in

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the cat you know blowing chunks In the world of

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finance there are three different sets of indicators that economists

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look at to get different perspectives on the economy and

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to help understand the ebbs and flows of doe Lagging

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indicators are measures that on ly change after something has

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shifted in the economy There like the pain message our

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brain sends when we grab a hot pan We've already

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grabbed the pan and gotten the burn and our brain

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is now a second later Just letting us know it's

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not pleased Outside of the business world a batting average

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for a baseball player is an example of a lagging

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indicator as it can only be calculated after the player

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has completed an at bat But it may reveal a

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pattern in his overall performance at the plate that leads

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to future salary negotiations Right Well unemployment rates are commonly

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used Lagging indicator Typically unemployment rates shift after something like

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a multinational corporation undergoing massive downsizing profits or another after

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the fact type of measure often cited as a lagging

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indicator leading indicators or measures that we hope will predict

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an upcoming pattern or change in the economy Something like

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the Consumer Confidence index Yeah how about that Well the

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CC I measures how confident we consumers feel about buying

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stuff and the data can be used to help predict

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where and how our money might be spent but more

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simply the performance of the stock market One portion of

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the economy tends to lead or predict the performance of

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the economy Overall when the stock market swells the economy

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tends to follow that trend just a little later than

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the stock market swell And then we have coincident indicators

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like our fitbit on the current state of the economy

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Yeah or a live security feed showing us what's going

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on in the break room right this instant and we

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see you can't So what kinds of measures Air considered

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coincident indicators While the gross domestic product numbers or GDP

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is a big one the GDP is the sum of

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the value of all goods and services produced in a

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country over a set time period like quarterly or yearly

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or the big to Canada You know that huge country

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north of the U S Had a GDP of one

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point six five trillion dollars in two thousand seventeen and

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a GDP of one point five four trillion in two

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thousand sixteen As a snapshot of where Aki Canada is

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right now in terms of producing stuff and offering services

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we can see that their GDP went up a tad

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over And what is that About one hundred billion dollars

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in a year on a smaller scale Production figures by

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week month year etcetera for various industries like Steal tech

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agriculture and so on again how much are they producing

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right now Retail sales for the week month year even

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day Yet those tell us what's going on right now

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like Amazon tracks all that stuff to the hour So

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yeah coincident indicators All for sure There are scads of

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other coincident indicators like personal income data payroll data revenue

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data unemployment rates and average hours worked in different sectors

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And housing starts stuff like that Some agencies like Federal

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Reserve We'll pop a whole mess of coincident indicators together

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into an index to given even larger snapshot of what's

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happening right now around the world In the economy personal

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income data could be things like average income based on

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a family size or average income of workers in different

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industries like manufacturing are mining or services Payroll data could

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include a company publishing its total payroll for all its

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employees as a whole as well as its pay two

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different sectors like workers on the front lines middle management

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and upper tie wearing management Knowing how much companies are

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paying their workers lets us peek at how many people

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are making a living or non living wage Well unemployment

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race which are also considered lagging indicators can offer a

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real time assessment of how many people are actually working

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right now compared to some other time right So if

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the unemployment rate is something insane like twenty two percent

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like hello Spain Portugal we're looking at you We know

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there's a massive problem with the economy right now in

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addition to knowing that something must have happened in the

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past to lead to such a bad crisis Well think

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of this Is your fitbit also displaying a real time

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caloric intake vitamin level body temp hunger level and thirst

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level in addition to all the stuff it already does

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Yeah well there's also that composite index of coincident indicators

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published by the Conference Board The number of employees on

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nonagricultural Hey rolls measures well the number of employees not

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working in agriculture manufacturing service and so on Basically it's

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how many people are employed making stuff and helping people

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but not growing stuff Index of industrial production measures Well

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you guessed it Stuff produced in manufacturing mining and utilities

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and yes level of sales in manufacturing in trade is

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the total sales of stuff that gets sold crazy right

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Right Zip it ken And aggregate personal income is the

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total amount of money people make Taken together these four

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coincident indicators provide a pretty comprehensive snapshot of where the

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economy is at any given moment Well the big takeaway

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is that the data are supposed to be real time

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right now this very minute day week month or year

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They're supposed to tell us what's happening right now They're

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coincident Coincident indicators are nothing more than a fitbit for

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the economy to tell us when the heart rate is

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too high or too low Or uh you know when

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Ken tries to sneak out early on a Friday Oh

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