There is a sign of recession in the US market. On one hand, the presidential election is approaching and it is yet to be decided who will be the new president of the country. Along with this, news is coming that the condition of the US market is not very good. In such a situation, a news has scared the US investors. Actually, lipstick has become a topic of discussion on the US social media. Let us know what is the relation between lipstick and the US market. And why is it in discussion.
Actually, the reason for this is Warren Buffet, the owner of Berkshire Hathaway, who is counted among the richest people in the world. It is also said about him that his investment is considered the litmus test of the American market. If he invests money in a company or withdraws money from a company, then the trend of the market is estimated from this.
Warren Buffett’s investment caused a stir
Meanwhile, Warren Buffet has invested in a cosmetics company. Interestingly, the sale of lipstick increases during recession. Now it is believed that Warren Buffet has predicted the recession. To earn profit from this, he has invested in a cosmetics company.
What is Lipstick Index?
Actually this term was used by Leonard Lauder, chairman of ST Lauder. Leonard Lauder is a big investor in America. In the recession of 2000, it was seen that the sale of women’s lipstick increased rapidly. The production of cosmetics also increased during the Great Depression in America from 1929 to 1933. Something similar was also seen after the global recession of 2008.
A lot of studies have been done on the reason behind this. It is believed that women buy more clothes in good economic conditions. Whereas, in bad times, women prefer to buy lipstick.
Experts associated with the lipstick effect say that in difficult times, women turn to cheap but attractive beauty products to make themselves feel better. This is an easy and inexpensive way to maintain their confidence.
Many studies have also revealed that cosmetic companies did not suffer as much loss during the recession as was estimated. One of the major reasons for this is lipstick.
Let us understand how much truth there is in this with some examples.
The terrorist attacks on America on September 11, 2001 pushed the country into a deep economic crisis. During this period of recession, according to research by Investopedia, lipstick sales doubled.
The economic recession between 2007 and 2009, which lasted for 19 months, left millions of Americans unemployed. Despite this crisis, major cosmetic companies such as L’Oreal and Estee Lauder reported strong revenue growth.
During the Great Depression in the US between 1929 and 1933, when industrial production fell by half, cosmetics sales also saw a rise. In particular, sales of lipstick rose, while sales of high-end cosmetics fell.
Why are the fears of recession increasing in America
In fact, many major economic indicators in the US are showing signs of weakness. Unemployment claims have increased significantly from the low level of January and the unemployment rate has risen to a 3-year high of 4.3 percent in July. Apart from this, the manufacturing PMI has fallen to a 9-month low.
Source (PTI) (NDTV) (HINDUSTANTIMES)