According to a news report, a certain private school in the northwestern US lately was faced with an exceptional problem. A number of 12-year-old girls were beginning to use lipstick and would put it on in the bathroom. That was fine, but after they put on their lipstick they would press their lips to the mirror leaving dozens of colorful little lip prints.

Every night, the maintenance man would remove them and the next day, the girls would put them back. Finally the principal decided that something had to be done. Inviting the girls to the bathroom she met them there with the maintenance man. She explained that all these lip prints were causing a major problem for the custodian who had to clean the mirrors every night.

To show how complicated it had been to clean the mirrors, she asked the maintenance man to show the girls how much effort was required. He took out a long-handled squeegee, dipped it in the toilet, and cleaned the mirror with it. Since then, there have been no lip prints on the mirror.

They say there are teachers, and then there are educators. Well now there are indicators. Did you know that there is a “lipstick indicator”? Indeed, I've seen this more than once. I don't think my lipstick buying habits would lead to this conclusion. Lipstick is expensive L'Oreal lipstick costs $6.99 a tube. Admittedly, it's a lot cheaper than a that strappy little tropical purse at Stein Market and cheaper than buying a new outfit at J.C.Penny’s. I try to keep my lipstick buying habits under control-- but this week, I had to buy some. There was a sale, don't you see they tempted me and I fell for it. It was L'Oreal buy one get one free on the "Endless" line. It is supposed to be an 8-hour lipstick, but I have my doubts. The good news is it goes on very smoothly, smells good, tastes great and leaves richly vivid imprint. As a matter of fact it was my recommended purchase of the week to the neighbors. It's right up there with last week’s hot pink lava lamp.

Ok, not really. A leading indicator is a term related to economic trends. It’s a measurable factor that changes ahead of economy as it establishes a particular pattern or trend. Used sometimes to predict changes in the economy most leading indicators are not always accurate. For example one economic expert says, “Bond yields are typically a good leading indicator of the market because traders anticipate and speculate trends in the economy.“

In the early 70’s the Stock Trader's Almanac developed the January Barometer as a leading economic indicator, which states as goes January, so goes the rest of the year. Whether the market is up in the first five days of January is the "early warning system." Researchers relate that this particular barometer has had four major errors -- in 1966 and 1968 during the Vietnam War, in 1982 at the start of the big bull market, and in 2001 with the 9/ 11 terrorist attacks. Bill Modlin with A.G. Edwards & Sons in Decatur, Illinois explains why:” January tends to be a strong month. There's a flow of pension fund money into the market, and bonuses that have been paid in December have found their way into the market,” adding that the third year of a president's term more often than not turns into an up market. In fact, since 1939 there's not been a down year in the third year of a presidency and Modlin believes, "The reason is that the administration will be doing everything it can to make the economy look good in preparation for re-election efforts." Sometimes the indicators work because they become self-fulfilling, said another investment planner in Decatur reasoning, "If everyone thinks it's going to go up because it's the third year of a presidential year, and they invest, it can be a self-fulfilling thing"

When indicators are discovered to be inaccurate they lose meaning in contemporary times some may even disappear. Hemlines, whether they went up or down, used to be regarded as an on the right trend predictor. Wanting to show off their silk stockings women would raise their hemlines as the story goes. But when things were bad, the skirts came down to hide they weren't wearing any. These days, there are so many types and styles of clothing, that theory has become less significant.

Another speculation was that the business cycle goes up and down as sunspots get smaller and larger was eclipsed when the cycles went out of sync. There are a several hypothetical markers of economic times. One is called the “Aspirin Count Theory.” The idea behind this one is that “stock prices and aspirin production are inversely related. “As stock prices go down, more and more people need pain relievers to get through the day.

A different one that is surprisingly accurate about 85 % so far is the Super Bowl Indicator. The theory states that “a Super Bowl win for a team from the old AFL (AFC division) means there will be a stock market decline during the coming year. Vice versa, if a team from the old NFL (NFC division) wins, the stock market will be up for the year.

The lipstick indicator is the tendency for lipstick sales to increase prior to and during a recession. One of the earliest citations of how the term is used in context was used by Christian Millman in an article titled Retailers gather to look to future published in January 2002 in The Morning Call of Allentown, Pennsylvania:

And even though Lauder thinks a recovery can't take hold without business leading the way, he too is not hopeful that it will be soon. That view, he explained, comes right from the mouths of women.

Or more appropriately, right on the mouths of women.

That's because his company developed what it calls a "leading lipstick indicator." A while ago, Estee Lauder noticed that whenever lipsticks sales went up, consumer confidence and spending went down. That happens, said Lauder, because women still want to feel good about themselves in tough times, but they can't always afford higher-priced items.

The compromise is lipstick.

Leonard Lauder the chairman of Estee Lauder Cosmetics is credited with coining the phrase, reasoning that when consumers are “less than confident about the future, she (or he) turns to less expensive indulgences such as lipsticks. Therefore, lipstick sales tend to increase during times of economic uncertainty or a recession. “

Believe it or not many economists have been surprised at the reliability of this theory as a signal of consumer attitudes over the years. Lauder points out that, “Over the years, the company has noted that the sale of lipstick indicates the mood of the American consumer - more sales signifies a pessimistic outlook” For six months following the September 11th terrorist attacks he noticed. "a huge imbalance of what stores are selling and what consumers are buying." Retailers were extremely cautious and reluctant to restock their inventory during such an uncertain time in his opinion, adding to the slowdown.

Why does the lipstick indicator work? Economic experts say most likely because of a so-called lipstick effect: the trend during rough times for customers to buy small, cheaper indulgences such as lipstick rather than putting money into large extravagances. Generally speaking as retail sales of this cosmetic go up, consumer confidence goes down. Estee Lauder keeps an eye on their lipstick indicator reporting than makeup sales rose 11 percent during one quarter. "It seems like lipstick is something that always sells," said one salesperson that works at a midwestern mall department store, "Women will go without perfume and moisturizer before lipstick."

Sources:

Leading Lipstick Indicator:
www.investopedia.com/terms/l/lipstickindicator.asp

Herald & Review Newspaper Website - Decatur, Illinois:
www.herald-review.com/rednews/2003/02/02/ build/Businesslead/businesslead.php

Trends In An Uncertain Economy:
retailindustry.about.com/library/uc/02/uc_wiat15.htm

The Word Spy – lipstick indicator:
www.wordspy.com/words/lipstickindicator.asp

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