5 Unusual Ways to See How the Economy is Doing

When someone mentions "economy bohot kharab hai aaj kal", our mind goes straight to the usual suspects, like:

• Gross Domestic Product (GDP)
• Unemployment
• Inflation rates

These are the “serious” indicators we’re taught to look at. But here’s the twist: according to these traditional indicators, India is actually doing quite well. Let me break it down for you:

India's GDP was worth approx ₹328 lakh crore as of November 2024. That makes India the 5th largest economy in the world—yes, we’ve beaten the UK.

Unemployment has also seen improvement. The rate dropped to 7.8% in September 2024 from 8.003% in 2023. Sure, it’s not ideal, but it’s a positive shift, showing more people are finding work.

Inflation is another big one, and we’ve actually seen a decrease there too. From a high of 6.7% in 2022, it has come down to 3.6% as of August 2024. Lower inflation means your hard-earned money isn’t losing value as quickly, which is good news for all of us.

So, while we may keep hearing about the economy's struggles, these major indicators tell us otherwise. But if you really want to know how the economy is doing, sometimes the unusual indicators give a clearer picture of everyday economic health. So, let’s take a peek!

Table of Contents:

a. The Big Mac Index

b. The Lipstick Index

c. The Hemline Index

d. The Buttered Popcorn Index

e. The Men's Underwear Index

The Big Mac Index:

Forget “GDP” for a second. Wanna know how strong a currency is? Look at how much it costs to buy a Big Mac burger. Why? Because it’s one of the most globally consistent products. This index was created by The Economist in 1986 and compares the prices of Bigif Big Mac in 54 different countries.

Theoretically, the same burger should cost about the same everywhere—unless, of course, currency values and economic conditions say otherwise. So basically, it uses the cost of this burger to measure Purchasing Power Parity (PPP). Here is a little insight into the Big Mac Index by Country (2024):

In India, for the Big Mac (okay, the Maharaja Mac—we don’t do beef here), you’d pay roughly ₹225 - ₹230 (or about $2.75). While in the US, it costs around $5.15 (₹434.67).  

So what does this tell us? Well, the Rupee is “undervalued” compared to the Dollar. You could argue this shows the Rupee’s lower purchasing power globally, but the bright side is: we’re getting burgers cheaper than the Americans.

The Lipstick Index

Believe it or not, lipstick sales can reflect economic confidence—at least in theory. During times of economic distress, people can hardly afford to buy luxuries like diamonds. However, buying lipstick that only costs somewhere between ₹100-₹1,000 is easier. Hence, sales of small luxuries like lipstick, skincare, perfume, etc., go up.

This measure of the economy is called “The Lipstick Index”. The term was coined by the former chairman of Estée Lauder cosmetics: Leonard Lauder, in the 2001 recession. During this time, consumer spending fell, but lipstick sales in the US picked up by 11%.

However, over the years, the index has expanded to include the beauty industry as a whole. During:

• The Great Depression, overall cosmetics sales increased by 25%.
• Covid-19, skincare sales in India saw a 10% rise!

The lipstick index may have evolved, but the concept remains relevant. Even if it's not just about lipsticks anymore, it seems people will keep reaching for these small comforts as a way to stay hopeful—even when the economy isn't perfect.

The Hemline Index

Yes, you read that right. In the 1920s, economist George Taylor came up with the Hemline Index. The idea is that, in good economic times, hemlines get shorter (hello, mini-skirts), and when things are rough, they drop (hello, maxi skirts).

Does this work in India? Eh, a little hit-or-miss. We're a tad more diverse in our fashion choices. Given our mix of saris, salwar-kameez, lehengas, and jeans, there’s no telling if the hemlines reflect the economy or just fashion trends. But it's interesting to think that people's fashion choices might say something about the economy.

The Buttered Popcorn Index

This is another one about “affordable luxuries”. It suggests that when the economy is a little worse for wear, people seek cheap entertainment (or, in this case, movies)! Because who doesn't want to escape reality with a bucket of popcorn?

Take India in 2019, for example:

• GDP fell down from 6.8% in 2018-19 to 4.5% in Q2FY20
• Unemployment rose from 5.27% in 2019 to 8% in 2020

However, 3 blockbuster Hindi films raked in a jaw-dropping ₹120 crore on 2 October FY2018-2019.

Talk about a plot twist! This trend isn't just an Indian thing; globally, box office sales often soar during recessions. In 2009, the global movie ticket sales jumped 7.6% while everyone else was panicking.

I guess this is the same reason streaming services saw such a rise during COVID-19. There were no public entertainment options available at the time. As a result, the OTT sector in India witnessed a 30% rise in the number of paid subscribers between March and July 2020.

It seems we'll always find a way to indulge in affordable entertainment. Just like we indulge in small luxuries.

The Men's Underwear Index

This one might be a little weird, but I did promise unusual. According to former US Federal Reserve Chairman Alan Greenspan, when men feel financially secure, they buy new underwear. When money’s tight? They hold on to the old ones for a bit longer.

During the 2008-2009 recession, men’s underwear sales dropped. But, from 2009 to 2016, sales across North America increased by ~₹7,389 crore ($1.1 billion; Conversion rate of 2016).

But in COVID-19 times, sales dropped once again. The Q2 performance of the top 4 listed innerwear firms in India was the lowest in a decade. Here have a look:

• Jockey’s sales only grew by 2% (its slowest ever)
• LUX’s sales didn’t see a change
• Dollar’s sales dropped by 2%
• VIP clothing’s sales dropped by 20%

These declines may reflect economic challenges or shifts in consumer behaviour. So, it's important to consider other factors. For instance, online innerwear sales in India grew by over 80% in FY24 compared to FY23, indicating a shift towards e-commerce.

The Bottom Line

Economic indicators are tricky— GDP, inflation, and unemployment tell one story, but sometimes indicators like Big Macs, lipstick, and even underwear offer a different take.

So, the next time someone says “Economy bohot kharab hai,” you can hit them with some Big Mac numbers or point out a rise in lipstick sales. Because let’s be real: these unconventional indicators as based on consumer expenses and purchasing power. They are more about the small, everyday choices we make than they are about spreadsheets and stock markets. And sometimes, a burger, a tube of lipstick, or even a pair of boxers can tell us a lot more than we’d expect.

Which odd indicator do you think reflects the economy best? Let me know in the comments!

That said, don’t start tracking lipstick sales and skirt lengths instead of GDP just yet. Yes, these indicators are fun to talk about and some even have historical evidence backing them up. But they’re no substitute for the real economic indicators.

Also Read: Know the Key Economic Indicators