More Indicators to Keep an Eye On

The quest to discern which way the economic winds are blowing has spawned an intense and widespread interest in all sorts of indicators, including some that are obscure or offbeat. In fact, I've highlighted a number of them in various posts at Financial Armageddon, including "More Direct," "Cutting for Broke," "More on What the Consumer Is Up To," "Follow Your Nose?" "Green Shoots in Escapism," "Proving Me Wrong," "The Unvarnished Truth," and "More Than the Shirts Off Their Backs." That said, there always seems to be more where they came from. Reports published today highlight two other developments -- [sigh] -- that we may need to keep an eye on:

"Per Capita Savings: Home Barbering Grows in Recession, With Hairy Results" (Wall Street Journal)

Clipper Sales Rise as Hairlines Recede at Salons, but Tonsorial Mishaps Invigorate Repair Work

Jane Angelich used to joke about her husband, Mark, going bald. Then with one faulty flick of the wrist, she made it happen.

Mr. Angelich had begun cutting his own hair to save money. His wife offered to trim a spot in the back he couldn't reach. So she picked up an electric razor, "put a little too much oomph into it," and carved out a "giant chunk" of hair. The fix: She shaved his entire head.

The downturn has created a nation of cost, and hair-cutters. To help pare their budgets, more Americans are bypassing the salon and opting to lop off their own locks. The results, can be shear disaster -- clogged drains, fresh cowlicks and crooked trims.

"It may look easy, but it's not," says Gordon Miller, executive director for the National Cosmetology Association, which represents more than 10,000 U.S. salons. He says that middle- and high-end shops are feeling the pinch, as consumers come in less frequently or go to lower-priced salons. In a January poll of 600 salons, about 72% said they have seen a dropoff in customer spending.

Regis Corp. just reported its first negative annual same-store sales in the company's 87-year history. Regis, which operates big salon brands such as Vidal Sassoon and Supercuts, expects to see more shrinkage in the next year, as opposed to the usual 2% growth. "We generally do okay during recessions," says Chairman and CEO Paul Finkelstein. The drop in business this time around is "different than anything I've ever experienced."

The aptly named George Trimm, a 22-year-old graphic designer in Dana Point, Calif., has scissored his hair more than 20 times in the past year. He started a "I Cut My Own Hair" Facebook group shortly after his first trim, and it is now 145 members strong. "Hair is a work of art," he says. "No one has mastered cutting it but me."

One commenter offers her secret for cutting long hair. "Make sure your hair is straight," reads her post. "Then use a striped sweater, match all the hair to one of the stripes in the front and cut. It will layer very nicely in the back."

Saving time and money are the chief benefits of the do-it-yourself 'do, says Mr. Trimm. His "multimillion-dollar secret" is placing a towel over the sink to catch hair clippings, thus ensuring an easy clean up and preventing drain clogs.

Heather Barmore of Albany, N.Y., who used to spend $200 a month on hair cuts and various hair treatments, takes a different approach when shearing her curly locks: "I keep the Drano around."

Sales of electric hair clippers expanded as the U.S. economy contracted. Wahl Clipper Corp., which claims over half the consumer market, said sales of hair clippers rose 10% in 2008 and are projected to rise 11% in 2009. Normally, the clipper category moves only a percentage point or two, up or down each year, says Pat Anello, Wahl's director of marketing.

Last month, Nicole and Pat Watson gave their two four-year-old twins "recession haircuts." Mrs. Watson purchased electric clippers and set up shop on the back porch, saving the St. Paul, Minn. couple the $25 they would normally drop every couple of weeks for the twins' trims.

Friends and neighbors watched as Owen and William took turns wiggling through their cuts. At one point, Mrs. Watson, who works at an art gallery, says one of the twins asked, "Are you sure you know what you're doing?" She said she did.

Other self-styled stylists are turning to devices like the RoboCut and the Flowbee, which combine vacuum suction and electric scissors. The RoboCut, priced at $44.99, has seen an uptick in sales since the recession began, according to RoboCut founder Alfred Natrasevschi, but he wouldn't say how much.

 .The Flowbee System goes for between $69.99 and $99.99. Micah Wojnowski started using one to save money two summers ago while between jobs. After two successful self-cuts, he made a "tic-tac-toe" board in the back of a friend's head after an attachment to the clipper kept slipping. Flowbee declined to comment.

Mr. Wojnowski posted the videotaped mishap on YouTube and overnight received over 25,000 views and hundreds of comments from angry Flowbee fans, he says. Most of them criticized the angle at which he approached his friend's head. Mr. Wojnowski now spends $50 a month at a San Diego salon.

Meanwhile, a mini-industry has sprouted up in salons: fixing botched at-home cuts.

John Barrett has had many clients who take matters into their own hands, achieve miserable results -- then quickly return for some tress relief.

"I've seen women come in, crying hysterically," over things like too-shorn bangs, he says. "It's a big deal." Sometimes, the scene at his eponymous salon, located on the penthouse level at Bergdorf Goodman on New York City's Fifth Avenue, can resemble an emergency room: Clients with hair-dye hazards, wrecked layers, and visible signs of emotional distress. "It's a psychological disaster," says Mr. Barrett, who caters to socialites and "America's Next Top Model" contestants.

A few blocks away, at the Minardi Salon, co-owner Carmine Minardi warns against the "at-home" method. "We get a lot of people who screw up their hair," he says. He estimates that roughly a third of all business now consists of "corrective" styling. There is no mercy reflected in the bill, which dings clients as much as 50% more for a corrective color than a regular dye job.

In Idaho Falls, Idaho, Melodie McBride's salon handles three or four repair jobs a week. One client "looked like his head had been through a thrasher," she says. Another man came in with an eyebrow that had been mistakenly shaved off.

The salon, called Lifes Balance, recently slashed eight inches of hair off a teary-eyed 18-year-old client's head after the teen's own creative attempts backfired. Huge chunks were missing, Ms. McBride says.

Some areas, such as the back of the head, can be particularly treacherous for amateurs to navigate, notes "Haircutting For Dummies" author Jeryl Spear. "If you could just take your head off and put it in your lap, you'd be OK cutting the back on your own," she says.

As for Mark Angelich, he has kept his head shaved since his wife's slip-up. "He's still got a mustache," Mrs. Angelich says. "But he's not letting me anywhere near it."

"Blue Chip, White Cotton: What Underwear Says About the Economy" (Washington Post)

For one answer to the nation's most pressing economic question -- when will the recession end? -- just take a peek inside the American man's underwear drawer.

There may be some new pairs there, judging by recent reports from retailers and analysts, and that could mean better days ahead for everyone.

Here's the theory, briefly: Sales of men's underwear typically are stable because they rank as a necessity. But during times of severe financial strain, men will try to stretch the time between buying new pairs, causing underwear sales to dip.

"It's a prolonged purchase," said Marshal Cohen, senior analyst with the consumer research firm NPD Group. "It's like trying to drive your car an extra 10,000 miles."

The growth in sales of men's underwear began to slow last year as the recession took hold, according to Mintel, another research firm. This year, Mintel expects sales to fall 2.3 percent, the first drop since the company started collecting data in 2003.

But the men's underwear index -- or, conveniently, MUI -- may also have a silver lining. Mintel predicts that next year, men's underwear sales will fall by 0.5 percent, and as with many economic indicators, a slowing of a decline can be welcomed as a step in the right direction. Retailers are reporting encouraging signs in the men's underwear department. Sears spokeswoman Amy Dimond said stores are beginning to see more sales. At Target, spokeswoman Jana O'Leary said sales of men's underwear have been stronger over the past two months and multi-pair packs are moving.

No less an oracle than former Federal Reserve chairman Alan Greenspan has given this theory credence, as described in a report on NPR two years ago. But you don't have to take his word for it. Just ask Kenneth Sanford, 59, of Capitol Heights, about his underwear. He said he usually buys new boxers every three months or so in maroon, black or white. But he had to stop working for medical reasons, and now he's having a hard time finding a new job.

To save money, he doesn't go out for ribs with his friends and family as much anymore. And when he indulges, he gets one piña colada instead of two. He hasn't bought a new pair of underwear in at least eight months.

"It's been a while now," Sanford said. "I just don't ever go shopping."

Of course, there are more conventional indicators of the nation's economic health. The gross domestic product fell 1 percent during the second quarter. Consumer spending and consumer confidence have been on a roller coaster this year. Home sales show some signs of bottoming out. But sometimes it is the little things that can be the most telling.

Leonard Lauder, chairman of the cosmetics company Estee Lauder, famously looked to lipstick sales as a barometer of consumers' mind-set during the last downturn. He believed that women were looking for small indulgences to lift their spirits during a tough economic time, though that theory has not held up in this recession, as sales of lipstick at mass retailers fell 8 percent over the past year, according to the research firm Information Resources.

Others look to a reported rise in prescriptions of anti-depressants and sleep aids last year as a sign of consumers' fragile state.

But perhaps no other purchase is as intimate as underwear. Few, if any, other people see it, so it's an easy place to skimp. According to Mintel, men buy an average of 3.4 pairs of underwear in a year. But from 2004 to 2008, the proportion of men buying single pairs at a time increased from 5 percent to 8 percent, while the share of men opting for packs of four or more fell slightly, from 68 to 66 percent -- indicating that shoppers may be trying to save money by buying only when necessary.

"People still need underwear," said Michael Kleinmann, president of FreshPair.com, an online underwear retailer. "They just have less money to spend."

The company sells high-end men's underwear that can run as much as $30 per pair, along with brands that cost less than $10. Kleinmann said that such less expensive pairs have had double-digit-percentage sales growth recently, while demand for pricier pairs is slowing.

Cohen, of NPD, said he hopes the recent positive signs in men's underwear will spill over into other need-based purchases. With the recession nearing two years, shoppers are at the stage where their stuff is simply beginning to wear out, providing an incentive to return to the stores.

"The consumers may be down, but they're not out," said Cohen, who is bullish on an economic recovery. "If this were a true, deep, long, embedded recession, they wouldn't even be buying underwear."

Comments

[Dave Narby]

I would just like to go on the record as saying that: Whoever thinks that stable cheap underwear sales rates are an indicator of a normal recession is a freaking moron.

[Morocco Bama]

I'm recession proof, I guess.....I don't wear underwear. I have boxers in my dresser from 1995. I'm a bad American.

[roger]

Checking out individual behavior is like keeping an eye on skin problems when a blood analysis is needed

[Tim]

Morocco Bama's swinging free ladies and gentlemen.