I’ve heard of the lipstick indicator – the idea that lipstick sales rise in a recession as women avoid big purchases in favour of little luxuries. Then there’s the hemline indicator, whereby dresses get longer in hard times, reflecting a less confident climate. But men’s fashion indicators are thinner on the ground.
So it was interesting to read in the Daily Mail this week that the ex-Federal Reserve chief, Alan Greenspan, sets great store by a particular item of clothing – men’s underpants. Apparently, or so Greenspan told US broadcaster Robert Krulwich, it’s because even when times are good, “men wear them until they are in total tatters” and only buy new ones when they really, really need to. So if sales fall, the economy is in big trouble – men are “so pinched” that they can’t even replace their shabby old boxers.
What are sales of pants doing now? Well, research group Mintel has just declared that it expects sales for 2009 to fall 2.3% compared with an earlier forecast for 2.6% growth. Presumably that’s bad news in Greenspan’s book.
There’s just one problem. We already know the economy’s in trouble – it’s been obvious for 18 months or more. Still, his latest comments explain a few things about Greenspan’s time at the Fed. Forget worrying about soaring house prices, or rampant growth in irresponsible lending – who cares, as long as sales of pants are behaving themselves?
Sales of Y-fronts might be good at confirming what we already know, but some more forward-looking indicators are actually showing signs of life. For example, a rising copper price suggests demand for the base metal – used in everything from plumbing to electrics – is up, which in turn suggests the economy is improving. So more optimistic investors might take heart from the near-30% rise in the copper price over the past month.
But I’d be wary about putting more money into the market on the strength of a few green shoots. This week our Roundtable experts give their views on whether the current bounce is real, or just a bear-market rally. I’ll let you read the Roundtable for yourself, but suffice to say, if you’re looking for a metal to invest in, I’d still be more comfortable with gold than copper. Gold has fallen below $900 an ounce, and may stay there for a while. Tales of ‘a new US gold-prospecting boom’, plastered all over the BBC, suggest now is not the time for contrarians to buy. But when the Financial Times discusses the possibility of a return to the gold standard with a straight face – as Gillian Tett did this week – it’s hard to believe that we’ve seen the last of gold’s gains for this particular bust.