The Journal. - Lady Gaga, Low-Rise Jeans, and the Next Recession

Episode Date: May 23, 2025

Economists have long analyzed data to predict the next recession. They’ve also turned to more offbeat economic gauges like underwear sales and skirt lengths. But now, the TikTok generation is seeing recession indicators everywhere. WSJ’s Hannah Erin Lang explains what Gen Z’s fascination with harbingers of economic doom might actually mean for the economy. Jessica Mendoza hosts.  Further Listening: - Is the Economy… OK?  - Trump 2.0: Where Is The Economy Headed?  Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

What do Lady Gaga, flash mobs, and low-rise jeans have in common? They're all things I thought were cool 15-plus years ago. They're also back. Not just as trends, but as harbingers of doom. Or what young people are calling recession indicators. There's a million recession indicators, but my number one right now is how many A-list celebrities are doing commercials. People brought tickets to Coachella a week before Coachella.

Which is crazy. That's a recession indicator. Opening Instagram like, damn, everyone got their master's degree this year. Congratulations, but also recession indicator. I've just searched recession indicator on TikTok. I mean, there's dozens of videos. Our colleague Hannah Erin Lang writes about financial markets and she became fascinated with the idea

that Gen Z is looking for economic insight in unexpected places. There's a video with the caption, recession indicators you may not have noticed. My top five recession indicators. Oh my gosh. places. Some economists might be offended by the idea that low-rise genes are somehow related to the nation's financial health, and they'll be ready to shut the argument down with an old truism. Anytime you bring up a conversation like this, economic data wonks are going to tell you

that correlation does not equal causation, right? But that being said, a correlation can still be interesting to look at. We are not in a recession by traditional measures. And the economy, by the measures we have looked at over the course of history, looks to be in a pretty good place right now. But the economy is so often about how people are feeling, right? How secure they feel, how optimistic they are about their financial future. And, you know, I guess there's something to be said for like,

why wouldn't those feelings be reflected in fashion or film or any other aspect of pop culture? Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, May 23rd. Coming up on the show, what Gen Z's recession obsession can actually tell us about the economy. up today at participating restaurants in Canada for a limited time. Hannah, what generation do you identify with? I think I would qualify myself as older Gen Z. Aha! Gen Z is the generation born between 1997 and 2012. I also identify as like culturally Gen Z. I think if you spend enough time in certain parts of the internet, I think I have a Gen Z sense of humor, I guess I would say.

Well then this is going to be perfect. We'll be representing two generations. I'm solidly a millennial. So you're just going to have to walk me through this whole situation. Please hold my hand. That's OK. Gen Z has good reason to be anxious about the economy. Some of their most formative years have been colored by economic turmoil.

Many of them were kids during the Great Recession of 2008, and some of them were going to college or taking their first steps into the real world right when the pandemic hit. Nowadays, the fear of yet another recession is everywhere. — Well, fears of a recession have been triggered after the U.S. economy shrunk in the first quarter of 2025. — President Trump refused to rule out the possibility of the U.S. entering a recession. — New fears of a possible recession on the horizon, the Dow losing 876 points after falling.

Hannah, can you define a recession and describe why they're so scary? A recession is a kind of prolonged period of the economy shrinking rather than growing. And for everyday Americans, that means, you know, the unemployment rate goes up, more people lose their jobs, they have a harder time supporting their families, and lots of folks across the country start to pull back their spending because times are really tough. As anybody who lived through the Great Recession or those scary months in 2020 would tell you, it can be a very scary time for Americans and their finances. And on that note, what is a recession indicator?

I mean, are these just like portents of a bad time coming? In the traditional sense, this is an economic indicator that could tell us that a recession is on the way. So I think like a really classic example of this would be like a rising unemployment rate. Other traditional indicators of a coming recession include rising credit card delinquencies, a slumping stock market, and more complex measures like the yield curve, which measures the relationship between short and long term government bond yields. But some of that data

takes a long time to accumulate. So it can represent an outdated picture of the economy, which can lead those looking for answers about what's happening now to go looking elsewhere for signs. This habit of looking for economic clues in more unusual places is not a new one, right? Economists, investors have been doing this for a really long time, trying to find other places that could supplement the information we already have about the economy, maybe offer a hint about what's to come before other lights on the dashboard start flashing red.

Some of those supplemental figures that actual economists turn to can be surprising. The men's underwear index is weird, but real. When guys hold on to old underwear longer than usual, economists say it's a sign they're cutting back on spending. The underwear index is a theory floated by former Federal Reserve Chair Alan Greenspan. With the idea being that your budget starts getting a little tighter in the household, you start to think of like where to cut back. Well, like maybe not a ton of people are going to see that you're wearing really old underwear.

So if these sales were to plummet, that could be a sign that folks are really starting to feel the pinch in their wallets. Women's beauty trends could be another example of this. So one thing I saw cited a lot was when times are tough, women might not have as much money to spend on, say, a new wardrobe or some other upgrade to their look. So they splurge on small luxuries like a tube of lipstick, for example. That recession indicator is known as the lipstick effect, though it's been pretty much debunked at this point.

But it's not the only beauty or fashion-related indicator out there. Another really long-standing, quote unquote, indicator in the fashion world, the hemline index, which kind of talks about the lengths of women's skirts as it relates to the economy and whether or not times are tough. The hemline index posits that harder economic times call for longer skirts. As the stock market goes

down, so do hemlines. And this one dates back to literally the beginning of the 20th century. And the kind of like the example from that period would be kind of like the 1920s, the flapper girls, shorter skirts. And then, you know, that that tide shifted a little bit in the 1930s as we enter the Great Depression. I don't think it quite bears out as you step more into modern fashion history. But that being said, some might say that the economic vibes are bad right now, and maxi skirts are back in style.

So do with that information what you will. Jensie is out there crunching those numbers right now. Or some of them are, anyway. Like data analyst Madé Lapuerta. If you're wondering whether we're headed towards a recession, why would you analyze the stock market when you can just analyze fashion trends? I think of it as like a fashion blog, but whenever I make claims, I try to back them up using analytics.

Madé runs the Instagram account, data, but make it fashion. So if I'm saying, you know, the Burberry bikini is in, I don't want to just say that. I want to tell you, you know, like it's increased, you know, X percent in popularity this past week and such. So yeah, a fashion trends, fashion analytics blog.

How many followers do you have now? I have a little bit over 500,000. Wow. This past March, Madé made a post about recession indicators that went particularly viral. She analyzed data about current trends in hemlines and lipstick,

and she found that they were growing in popularity. Long skirts or maxi skirts were particularly trendy, up by almost 400%. Madé posted that statistic on her Instagram, along with a picture of the Sex and the City character, Charlotte York. Charlotte was looking a little bit concerned,

and so it just worked really well to be like, oh no, Maxi hemlines are up in popularity. Does that mean we're headed into a recession? Mare also wrote, quote, "'We are probably definitely headed into a recession. In the comments, some people rolled their eyes at her conclusion. Well, you know, this woman doesn't know

what she's talking about. This is all made up. But a couple of weeks later, the stock market did tank. And in the aftermath, Madé's post blew up. This is not the first time I've posted about recession indicators, but it's definitely the first time it's taken off this largely, or this extremely.

The post now has over 200,000 likes and has been shared more than 20,000 times. Did you feel like you called it? I mean, I would never, I would never, you know, give myself that big of a pat on the back. I don't know if I would say I called it, but I would say I mean, I would never, I would never, you know, give myself that big of a pat on the back. I don't know if I would say I called it, but I would say I was, um, it was nice to see that the fashion trends did have some validity there. Yeah. After the break, Gen Z goes gaga over recession indicators. What's better than a well-marbled ribeye sizzling on the barbecue?

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And I would say they're finding them just about everywhere. That's my Gen Z colleague, Hannah Aaron Lang again. This has included everything from low rise jeans coming back to flash mobs and like Lena Dunham leaving New York. Like it's a really extensive list of, you know, what these people on the internet are now calling signs or potential signs of an oncoming recession or economic downturn. Another big recession indicator the youths are talking about is what they call recession pop.

Which is the idea that pop music is becoming upbeat and super danceable again because times are tough and people need an escape. And the last time that happened was 2008 with Lady Gaga's Just Dance. Just Dance is gonna be okay. It's got a tune on it. Which was a jam, by the way. Yes, well, and if you think about it, the theory kind of holds. Because you think about that and you're like, okay, this song was released literally, the Great Recession was happening, and the lyrics are,

Just Dance, it's going to be okay. That's really interesting, right? And the idea is that, you know, that that's happening again. Not only is Lady Gaga herself making dance pop music again. Right. She just came out with a new album. Right, exactly. But that her kind of artistic descendants are making similar music. So, you know, Charlie XCX or Chappell Rhone might fall into that category.

Maybe it's because I'm a millennial, but I found it a bit hard to parse through all these recession signs. I mean, even among the types of recession indicators, right? Like longer hemlines, longer skirts, suggesting the possibility of a recession, but also like club music. Like it's kind of, like who's going to the club in a... I mean, maybe they are. I'm not cool enough, but in a maxi skirt really, like at this point. It seems kind of odd.

Well, they might have said who's going to the club in a blazer. Oh god, don't remind me. Corporate wear at the club was such a thing. The simultaneous return of long skirts and dance music could be a recession indicator, or maybe it's just the cyclical nature of trends. But either way, there's something to be said about the fact that people are making these connections at all, especially since we're not in a recession. If young people are quick to believe that we're headed for a recession, that a recession is imminent despite economic data itself painting a different picture right now, then I think

that does tell us something about how young people are experiencing the economy and that there are real challenges. And then just kind of like playing a little bit of a devil's advocate here. Don't economists, and not to belittle the profession and their expertise or anything, but like don't economists make predictions based off vibes too? Economists use vibes based data all the time. We call it consumer sentiment and consumer confidence. Right.

We use this regularly and we report on it here at the time. We call it consumer sentiment and consumer confidence. We use this regularly and we report on it here at the journal. I should mention here that consumer spending is so important because it's 70% of the US economy. That's sort of what economists are watching for. When that spending slows, that becomes a real problem for the economy, which is why we watch sentiment. But recently, the case has been that negative sentiment doesn't always mean that people are going to stop spending, for example. This has kind of been the theme of the past few months. Consumer spending hasn't slowed down, despite consumer sentiment being at near

record lows. But there's also the reality that the more we talk about a recession, the more likely it is that people start preparing for a recession, which could eventually lead to an actual recession. Like, regardless of whether or not you think low-rise genes can predict the next economic downturn, I think the fact that many Americans find it believable that we could be entering a recession sometime soon is you know an important piece of information about how everyday people are experiencing the economy. And I should also add too that you know in circles on Wall Street or economists you know folks that debate this on a daily

basis in a more professional way that you know, there's all this reticence about Even saying the word recession. It's why people on Wall Street call it the our word, which is really quite strange but it's because by speaking about a recession or You know constantly discussing the prospect of an economic downturn it, you know, there's this it becomes a self-fulfilling prophecy Yes downturn. It you know, there's this, it becomes a self-fulfilling prophecy. Yes, there's this awareness that if you talk enough about how things are going to be bad further down the line, then people might start to prepare. They might start to pull back their spending, right? They and that could create the very recession that we had feared.

So I think that's an interesting piece of that as well. That perhaps the biggest recession indicator of them all is that we are talking about recession indicators so often. That's all for today, Friday, May 23rd. The Journal is a co-production of Spotify and The Wall Street Journal. The shows made by Katherine Brewer, Pia Gadkari, Carlos Garcia, Rachel Humphreys, Sophie Cotner, Ryan Knutson, Matt Kwong, Kate Linebaugh, Colin McNulty, Annie Mennoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez Espinosa, Heather Rogers, Piers Singie, Jeevika Verma, Lisa Wang, Katherine Whalen, Tatiana Zemis, and me, Jessica Mendoza. With help from Trina Menino.

This is Trina's last week working with us. Thank you for everything, Trina. We wish you well. Our engineers are Griffin Tanner, Nathan Singapok, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Catherine Anderson, Peter Leonard, Bobby Lord, Emma Munger, Nathan Singapok, Griffin Tanner, So Wiley, and Blue Dot Sessions. Fact-checking by Mary Mathis and Amelia Schaumbach. Thanks for listening. We're off on Monday for Memorial Day.

We'll be back with a new episode on Tuesday. See you then.