The Lipstick Index was developed by Lenard Lauder, the former president of the Estee Lauder Group. He analyzed Estee Lauder’s actual revenue figures and found that lipstick sales bucked the trend during the 1990s U.S. recession and the September 11, 2001 terrorist attacks. This shows that the worse the economy is, the more people need to buy cheap consumer goods to keep themselves happy.
The lipstick index means that in times of recession, women do not have money to buy other expensive skin care products, but they can always afford to buy lipstick.
Economists explain the lipstick index this way: the economic downturn has led to a downturn in consumption, and women will tighten their purse, so expensive cosmetics will naturally be cut first. But “face” and can not be ignored, especially in the workplace, women, showing their faces, quite indecent. At this time, a simple lipstick, a decent lip gloss, as always, can make a woman’s face light. Even if you are shy, you can always afford to buy a few lipsticks. Therefore, the more recessionary the economy is, the bigger the lipstick sales are.
However, since the data of lipstick sales is much less compared to other commodities, it does not seem to be representative and convincing, so mainstream economists do not seem to be optimistic about the lipstick index reflecting the economic recession. However, there are still many people who believe that the lipstick index is a reverse indicator of economic development.