The underwear theory of recession and recovery

By on October 13, 2012

Everyone seems to have their own method for determining whether the economy is headed towards recovery or recession, from four-prong tests to loads of garbage. But one method that former Federal Reserve Chairman Alan Greenspan often used to sketch the broader economy may be the weirdest yet: underwear sales.

Greenspan’s theory on underwear sales as an economic indicator was fairly straightforward. ’If you look at sales of male underpants it’s just pretty much a flat line, it hardly ever changes,’ NPR’s Robert Krulwich explained of the theory… ‘But on those few occasions where it dips that means that men are so pinched that they are deciding not to replace underpants.’

“In 2009, that certainly was the case. In April of that year…the leading global research company Mintel produced a study showing a 2.3 percent drop in sales of all men’s underwear products in 2009. The recession had come quickly and unexpectedly. In November 2008, Mintel had forecast underwear sales to grow by 2.6 percent in 2009.”

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