Quirky Might Be Better

A few recent posts, including "Another Crop of Interesting Indicators" and "More Indicators to Keep an Eye On," have highlighted methods for reading the economic tea leaves that might be considered quirky, at least in comparison to the measures mainstream analysts traditionally rely on.

That said, I can think of some reasons why nontraditional barometers might offer better insight into the health of the economy than the more familiar gauges. Let's take The Conference Board's Index of Leading Economic Indicators, for example. This well-known gauge has recently been suggesting that the economy is on the road to good health.

However, the LEI is comprised of several components, including stock prices, money supply, yield curve, and, perhaps, jobless claims, that have almost certainly been distorted or otherwise affected by unique macroeconomic developments (e.g., the bursting housing and credit bubbles) and government interventions that are virtually unprecedented, at least during the past 70 years or so.

That may be one reason -- aside from the mindless Pollyanism that tends to run rampant in the financial district -- why there is such a big disconnect between Wall Street and Main Street.

Under the circumstances, it might make sense to pay attention to yet one more nontraditional indicator that seems to be flashing warning signals nowadays, as detailed below by The Chosun Ilbo in "Hair Dyeing Fad Reflects Recession":

Dyed hair is making a comeback. L'Oréal, the world's no.1 hair dye manufacturer, saw the sales of its hair color products surge some 30 percent in September compared to a year earlier. The sales of unusual dye including red, copper and metallic colors soared 47 percent.

Experts make connections between the trend and the recession. A beauty specialist said people seek to escape reality in a recession, and dyed hair offers a kind of fantasy image. During the 1997-98 Asian financial crisis, dyed hair was also fashionable.

More middle-aged people also dye their hair in an effort, experts say, to look younger and stand a better chance in the depressed job market.

It is a global phenomenon. The U.K. Telegraph called the phenomenon a "gold rush" and quoted celebrity hairdresser Andrew Barton as saying that many people are dyeing their hair blond to find an antidote to the depression. In the U.S., the term "hair dye index" was newly coined to show the link between the economy and dyeing hair. People's hair color becomes lighter as economy worsens.

(Hat tip to Economists Do It With Models.)

Comments

[Demetrius]

Hair dye? A well known source of allergy conditions, and can kick in some nasty chemical reactions. There are suggestions that one long term effect can be brain tumours. As for L'Oreal they are alleged to have had some very close relationships with the Nazi's in WW2. Indeed the numbers of chemists they employed in experimental work increased.

[roger]

for a look into the future,if this doesn't make it
clear, nothing will.
http://www.guardian.co.uk/business/2009/sep/28/us-dollar-usurped-china-euro-world-bank

[Jules]

One might wonder if L'Oreal sales surged because women have returned to do-it-yourself hair dye in a box due to lack of money. Hair salon color costs $100+. DIY $20.