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These anomalies may be worth keeping an eye on


The completion of the world’s tallest buildings is thought to be a less conventional sign of an economic downturn. Pictured here on April 3, 2022, is the Merdeka 118 tower in Malaysia, completed in late 2021 and said to be the world’s second tallest skyscraper.

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It’s not just the bond market and the stock market that can signal an economic downturn.

From the men’s underwear index, to the contour index, there are also some more unique economic indicators that might be worth keeping an eye on.

Lately, recession fears are growing. Investors are increasingly concerned that record-high inflation amid the Russia-Ukraine war, coupled with the Federal Reserve’s aggressive plan to raise interest rates, could slow economic growth.

This growing sense of insecurity has been reflected in the US government bond market, through what is known as the yield-curve inversion, which preceded the recession. Investors sold short-term bonds to pay down government debt, causing the 2-year bond yield to rise higher than the 10-year yield.

However, economists stress that inverse bond yields are no guarantee of a recession. Indeed, this indicator can appear as much as two years before the recession is sustained.

There’s a host of other economic data that could serve as recession signals, including data on employment and consumer spending. Market watchers have also turned to more unusual measures of economic health.

Vertical Rectangle Index

British economist Andrew Lawrence developed the so-called “skyscraper index” in 1999. This measure links the construction of the world’s largest buildings with the onset of an economic crisis. economic.

Lawrence said in a 2012 interview with the nonprofit Council on Tall Buildings and Urban Habitat, which he has reviewed since the late 1800s and found a correlation between the completion of the world’s tallest buildings and economic crises. economic.

Notable examples include the completion of the Chrysler and Empire State buildings in New York during the Great Depression.

Lawrence explains that the completion of these skyscrapers tends to “cover up what the boom of the big buildings is.” However, he points out that the problem is not the tall buildings themselves, but when there is a “cluster” of these skyscrapers.

In terms of newly completed skyscrapers, Kuala Lumpur Merdeka Tower 118 is completed by the end of 2021 and is the second tallest building in the world. New York’s Steinway Towerbelieved to be the thinnest skyscraper in the world and one of the tallest in the Western Hemisphere, has also just been completed.

Men’s underwear index

For former Federal Reserve Chairman Alan Greenspan, it was sales of men’s underwear.

NPR correspondent Robert Krulwich said in 2008In the midst of the global financial crisis, Greenspan explained to him that since underpants are one of the last pieces of clothing men look for, it acts as a good indicator of tough times.

Greenspan reported that men’s underwear sales tend to be fairly steady, but the drop in sales shows that men’s finances are so strained that they decide to stop buying replacements.

Hemline index

Lipstick index

Estee Lauder President Leonard Lauder developed the “lipstick index” amid the economic downturn in 2001. He suggested that women should spend more on small luxuries, like lipstick, to bring you back in difficult times.

This theory is not true during the Covid-19 pandemic in 2020 when Makeup sales fell as consumers are restricted to stay at home during the lockdown.

Russ Mold, director of investment research at AJ Bell, told CNBC by phone that while investors shouldn’t take these soft economic indicators for granted, they are “always worth keeping an eye on.”

It’s when the prices of luxuries like champagne and art “go through the roof,” says Mold, at the same time as stock prices, share buybacks, mergers and acquisitions and debt that investors should jump on. head feels a little more anxious.

“It’s a kind of bull market, the kind of happy-day-to-be-forever behavior that can’t last forever, because it never happens,” he said.

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