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the lipstick index

Earlier today I learned of these numbers today from Mature Landscaping:

Salary of retired US Presidents ……………$180,000 FOR LIFE
Salary of House/Senate ……………………..$174,00​0 FOR LIFE
Salary of Speaker of the House …………….$223,500 FOR LIFE
Salary of Majority/Minority Leaders …… $193,400 FOR LIFE
Average Salary of a teacher ……………….. $40,065
Average Salary of Soldier DEPLOYED IN AFGHANISTAN $38,000

 

I had been feeling unsettled by a gnawing sense of guilt and shame ever since. That’s probably why when we caught a glimpse of the evening news, I suddenly blurted out,

Did you know how much a soldier that is currently fighting in the war is paid? A year? $38,000. That’s how much!

The boys immediately were feeling just as outraged. “That’s not a lot of money right?” The Teenager got a bit emotional. “And they are risking their lives over there!”

8-year-old Mr. Monk got up on the coffee table and pontificated as he’s wont to.

You know what? What we need is for the economy to get better!

I swear I have no idea where he got this (or any others). We seldom watch TV, let alone news. I wonder whether this has anything to do with his endless viewing of The Simpsons. In fact, he watches The Simpsons so much he’s able to quote some of the episodes the way The Husband is able to quote The Princess Bride.

You know how you can tell the economy is getting lower?

(He is, after all, only 8 years old…)

The free ice cream at ______ Burgers is now so small that you only get the bottom part. It used to be as big as the Dairy Queen’s!

Hold the thought while I contact The Economist about the Ice Cream Index idea.

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The first time I heard about the Lipstick Index was from a Mary Kay rep: I learned from her that the three recession-proof products are lipsticks, alcohol, and cigarettes. It is not difficult to understand why alcohol and cigarettes are recession-proof: if you are addicted to something, you are going to get your drink on, in good times or hard times. (The same can be said of drugs and “purchased sex”, then? I imagine a flat line across the chart for these addictions?)

Above is the Daily Chart from The Economist on January 23, 2009, comparing national GDP to lipstick sales from 1989 to 2007.

The term Lipstick Index was coined by Leonard Lauder, the chairman of Estée Lauder, in 2001 during the recession. Lipstick sales in the US jumped by 11% in the 3rd quarter, (and more excitingly for the would-be theorists, the sales increased 25% for cosmetics during the Depression). The common theory states that lipsticks is a relatively inexpensive luxury for women with tighter purse strings. But statistics shown here does not show an obvious trend to prove this theory.

In my view, there will always be people who can purchase luxury goods when the rest of us are forced to “eat cake”. The retail anecdotes for this past Christmas season tells an interesting story: when stores were saddled with unsold inventories, 3 (relatively) big-ticket items were hot hot hot, couldn’t keep them on the shelves: Nintendo Wii, Uggs Boots, and Amazon’s Kindle.

Go figure!

Now if anyone could explain to me the attractions of those Uggs Boots…

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