‘Your Rich BFF’ Vivian Tu: Why Higher Makeup Sales Are a Recession Indicator
Written by
Daria Uhlig
Edited by
Cory Dudak
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Treating yourself to more cosmetic purchases than usual? If so, you’re helping to drive a 3.8% increase in revenue for lip cosmetics this year, per Statista. As Your Rich BFF founder and CEO Vivian Tu explained in a recent video on her TikTok channel, that could mean bad news for the U.S. economy.
“Common sense would have you think that during tough economic periods, people would cut back on nonessential purchases,” Tu said. But that’s not always what happens. In fact, the lipstick indicator coined by Leonard Lauder, one of the heirs to the Estee Lauder cosmetics company, found that the opposite was true.”
How ‘Lipstick Index’ Works
The Wall Street Journal once reported that Lauder’s “Leading Lipstick Index,” which tracked sales across Estee Lauder brands, had risen during recessions going back at least as far as 1990. Lipstick sales also increased after the Sept. 11 terrorist attacks. With prices starting at about $1.99 at the time of that report (and about $10 today), lipstick is an affordable substitute for pricier luxuries that might be out of reach during periods of financial uncertainty.
As Lauder, who at the time was chairman of Estee Lauder Cos., told WSJ, “When lipstick sales go up, people don’t want to buy dresses.”
Of course, the lipstick effect isn’t exclusive to lipstick. During the Covid-19 pandemic, for example, masks made lipstick impractical, prompting consumers to look toward other cosmetics.
“The lipstick index has been substituted with the moisturizing index,” Fabrizio Freda, then CEO of Estee Lauder, told CNN last year. “But the concept of the index is still there.”
Although the index is usually associated with women, a Deloitte Insights survey found that men and women splurge on affordable luxuries in about equal numbers, and men actually spend more on those purchases. But they’re most likely to spend on food and beverages.
The Bright Side
However you satisfy your desire to spend, experts say it’s OK to splurge on the occasional affordable luxury. “By indulging in small, meaningful pleasures, you can reduce stress, boost your mood and cultivate a more positive outlook,” said Robert Cuyler, PhD, chief clinical officer at Freespira, in an interview with VeryWellMind.
Just be careful about how you approach your purchases so you can indulge guilt-free. For example:
- Develop healthy habits for managing stress, anxiety, boredom and other emotions that can trigger overspending.
- Make room in your budget for small luxury purchases.
- Spend intentionally, not on impulse.
- Pay with cash or debit.
- Be aware of the undue influence social media can have on purchase decisions.
Lest you still feel guilty about spending during a financially stressful time, try to keep your spending in perspective. “Worry about the big stuff” and “check in about the medium stuff,” advised Jeff Kreisler, head of behavioral science at J.P. Morgan Private Bank, in a blog post on the J.P.Morgan Wealth Management website.
“Don’t stress about little stuff,” he said.
More From GOBankingRates
Sources
- Statista, “Lip Cosmetics – United States.”
- Vivian Tu | Your Rich BFF (video), “What does LIPSTICK have to do with a RECESSION?!“
- The Wall Street Journal, “Rising Lipstick Sales May Mean Pouting Economy and Few Smiles.”
- CNN, “Is a recession coming? Economists say look at women’s lips.”
- Deloitte US, “For consumers, splurges aren’t just lipstick.”
- Verywell Mind, “Little Luxuries Can Make a Big Difference for Your Mental Health.”
- Chase Bank, “What is the lipstick index?“
