Everybody's Business – "Can Makeup Help Prop Up the Economy?"

Podcast: Everybody's Business (Bloomberg & iHeartPodcasts)
Air Date: November 14, 2025
Hosts: Max Chafkin, Stacey Vanek Smith
Featured Guests: Amanda Mull (Bloomberg Businessweek), Alison Schrager (Economist, Manhattan Institute)

Episode Overview

This episode investigates whether makeup and beauty spending can provide buoyancy to the broader economy during turbulent times—a question inspired by Businessweek's deep dive on the beauty industry. The hosts explore the "lipstick effect," analyze the peculiar resilience of beauty retail, discuss real estate affordability (including the debated 50-year mortgage proposal), and dissect the rise of giant beauty retailer Ulta. The conversation is energetic, sharp, and dotted with personal anecdotes, on-the-ground interviews, and expert analysis. The episode ends with a lively take on underrated business stories of the week.

Key Discussion Points & Insights

1. The Government Shutdown and an Atmosphere of Economic Uncertainty

(Start – 02:57)

• The longest government shutdown in U.S. history (seven weeks) has just ended, leaving government workers and the broader economy in need of stabilization.
• Data disruptions during the shutdown have complicated economic forecasting, especially regarding employment and consumer sentiment.
• Shift in political messaging: Both parties are grappling with questions of affordability, particularly in housing.

2. The Lipstick Effect: Recession Indicator or Retail Therapy?

(02:58 – 08:36)

• The "lipstick effect" describes the phenomenon where cosmetics sales rise during recessions.
  • Originated by Leonard Lauder, then-CEO of Estée Lauder.
• Stacey Vanek Smith investigates modern interpretations and debunks dated, sexist explanations:

  "Lipstick effect is completely innocent, in my opinion. It's definitely not driven by those sexist assumptions... It's just simple treat."
  — Yasmeen Dildar, economist (04:15)

• Empirical studies indicate the effect is neither about mating nor beauty obsession, but about affordable self-indulgence when bigger luxuries are out of reach.
  • Cosmetics have a "sweet spot" (~$40) for affordable treats.
  • Parallel behaviors: men may indulge in beer, sports betting, electronics, or video games.
• On-the-ground interviews:
  • (05:39 – 06:48) Stacey interviews Sephora shoppers.
    • "Our paycheck might as well go directly to Sephora."
      — Sephora Customer 1 (05:42)
    • "Nars concealer could, like, I could be dead, and it will wake me up from like... Like, you could make a zombie look good."
      — Sephora Customer 1 (06:02)
    • “The high that I get from makeup or perfumes is not the same... If I bought, like, a nice little blazer, it's a different joy."
      — Sephora Customer 1 (06:20)

3. Treats for All: Gendered Differences in Comfort Spending

(07:08 – 08:36)

• The hosts discuss male analogues to the lipstick effect: video games, electronics, and increasingly, sports betting.
  • "It might be sports betting now... You have these stories about people like my spouse has lost, like $300,000 betting on sports or whatever. I feel like we're kind of getting into that territory here."
    — Max Chafkin (07:16)
• Both men and women are scaling back major clothing purchases in favor of frequent, affordable treats.

4. Home Affordability & The 50-Year Mortgage Debate

(08:36 – 19:57)

• Segue into a post-shutdown discussion on economic affordability and real estate, catalyzed by a controversial Trump administration proposal for a U.S. 50-year mortgage.
• Economist Alison Schrager provides context:
  • The difference between 30- and 50-year mortgages is primarily smaller monthly payments but slower equity buildup.
  • "People are very upset about this idea because there's this...ideal that you buy a house, you pay it off and then it’s yours. And this...makes this impossible."
    — Alison Schrager (13:15)
  • Most homeowners don’t stay in their property for the entire term anyway.
  • Lower monthly payments could allow middle-class buyers to diversify investments beyond their home.
• Major criticism: A longer mortgage term may fuel further home price inflation, require additional government subsidies, and exacerbate inequality.
  • "Basically it just causes home prices to go up more because suddenly you could afford even more. And...if they actually created this policy, it would force the federal government to essentially...backstop these loans..."
    — Max Chafkin (13:56)
• Schrager’s policy take:
  • Prefers a 50-year mortgage over interventions like forced low interest rates or looser lending standards.
  • Thumbs-up, but with caveats: “50 year mortgage, not the worst solution to the housing crisis.” (19:52)
• Underlying issues: Aging first-time buyers (median age jumped from 33 to 40 in just five years), persistent unaffordable home prices (urban and mid-sized cities like Boise now out of reach), and the problem of conflating homeownership with wealth-building in the American psyche.

5. Ulta vs. Sephora: The Beauty Industry’s Big-Box Outlier

(23:02 – 36:39)

• Amanda Mull joins to discuss her Businessweek feature on Ulta, a Fortune 500 giant quietly outpacing retail expectations:
  • 1,500 stores, $11B+ in annual revenue, and massive growth even post-pandemic.
  • Ulta’s value proposition: one-stop shop for all price points (mass market to luxury), in everyday, accessible locations.

    “They are like the Best Buy or Home Depot of the beauty industry.”
    — Amanda Mull (24:57)

  • "Consumers understand...they want the Chanel version because it has the cool packaging, because it feels cool to buy something from Chanel. And the existence of that lip gloss in the same place that they buy CeraVe body wash...is not like one does not damage the other."
    — Amanda Mull (26:49)
  • Key differentiator: Emphasis on in-store experience and try-before-you-buy, with 80% of sales still taking place in physical stores (despite a strong online presence).
• Sephora vs. Ulta:
  • Sephora is “all about cool, high-end, chic, restricted selection” in high-rent districts; Ulta goes for inclusive, everyday shopping centers with mass and luxury options side by side.
  • Preference for Ulta among non-coastal and less fashion-obsessed markets.
• Post-pandemic trends:
  • Growth in beauty was explosive, particularly as life reopened (pandemic “YOLO” phase), but the boom is now plateauing.
  • New business fronts for Ulta: international expansion, e-commerce marketplace vetting trendy TikTok brands, and experiential retail (in-store salons, classes, masterclasses, etc.).
• Retail lessons:
  • Ulta and Sephora succeed where drugstores flounder by prioritizing staff, customer experience, and creative engagement (unlike drugstores locking up merchandise and minimal staffing).
  • Even with minor security precautions (e.g., locked perfume displays), Ulta provides scalp-to-toe “hope”—a theme echoed by the Businessweek beauty issue.

6. Memorable Quotes & Moments

• On retail therapy:
  "The high that I get from makeup or perfumes is not the same... If I bought, like, a nice little blazer, it's a different joy..." — Sephora Customer 1 (06:20)
• On Ulta's unique approach:
  "They're like the Best Buy or Home Depot of the beauty industry." — Amanda Mull (24:57)
• The CEO of Revlon said:
  "We don't sell makeup, we sell hope." — Referenced by Stacey Vanek Smith (30:13)
• On American homeownership ideals:
  "...we've sold real estate as this American dream... but if we actually built enough housing...home prices would also fall. A lot of Americans own a home, and it's their primary asset in their portfolio." — Alison Schrager (15:44)

7. Underrated Stories of the Week ("Enders")

(38:49 – End)

• Max’s Pick:
  • The weekend X (former Twitter) feud between Joyce Carol Oates and Elon Musk:

    "So curious that such a wealthy man never posts anything that indicates that he enjoys or is even aware of what virtually everyone appreciates... But doubt he reads." — Joyce Carol Oates (40:20)

    • Musk retorts: "Oates is a liar and delights in being mean. What, not a good human?... eating a bag of sawdust would be vastly more enjoyable than reading the laboriously pretentious drivel of Oates." (40:36)
  • Hosts relish the pettiness and the meta-commentary about billionaire presence on social media.
• Stacey’s Pick:
  • The U.S. has minted its last penny.

    "...the penny’s like the oldest form of currency...shaped our culture in many ways. Like, I put in my 2 cents...” — Stacey Vanek Smith (43:27)

    • Brief discussion on inflation, cost of minting (penny, nickel, dime), and nostalgia for "penny-smashing" tourist machines.
• The segment concludes with Amanda Mull siding with high-quality "posting" as a public good, giving the edge to Max's Twitter feud story.

Notable Quotes with Timestamps

• "Lipstick effect is completely innocent, in my opinion...It's just simple treat."
  — Yasmeen Dildar (04:15)
• "Nars concealer could, like, I could be dead, and it will wake me up from like...Like, you could make a zombie look good."
  — Sephora Customer (06:02)
• "50 year mortgage, not the worst solution to the housing crisis."
  — Alison Schrager (19:52)
• “We don't sell makeup, we sell hope.”
  — Revlon CEO, as referenced by Stacey (30:13)
• "They're like the Best Buy or Home Depot of the beauty industry."
  — Amanda Mull (24:57)
• “Eating a bag of sawdust would be vastly more enjoyable than reading the laboriously pretentious drivel of Oates.”
  — Elon Musk (40:36)

Other Key Moments with Timestamps

• [02:58] – Lipstick Effect explained & origins
• [05:39] – Street interviews at Sephora
• [09:10] – Introduction to the 50-year mortgage debate
• [13:15] – Emotional reaction to 50-year mortgage ("Romantic ideal")
• [24:57] – Amanda Mull on Ulta’s meteoric rise in beauty retail
• [30:13] – "We don't sell makeup, we sell hope"
• [33:59] – Retail innovation: locked perfume, in-store experiences at Ulta
• [40:21] – Joyce Carol Oates critiques Elon Musk on X
• [43:27] – Goodbye to the penny

Summary & Takeaways

• Beauty spending is surviving, even thriving, during economic setbacks—a signal of both consumer psychology (the lipstick effect) and the innovative resilience of big retailers like Ulta and Sephora.
• The episode debunks regressive gender theories about cosmetics and highlights that small, affordable indulgences bridge the gap for both men and women when larger luxuries are out of reach.
• Policy debates (such as the 50-year mortgage) reflect deep social, financial, and generational divides about homeownership and the American Dream.
• The business of beauty is as much about selling hope and possibility as it is about selling products.
• Retail is not dead: It thrives when it delivers experiences, convenience, and a touch of escapism.
• The public’s response to economic and cultural change is revealed not only in the markets, but also on social media—where billionaires and literary icons still spar for attention.

For Listeners Who Missed The Show

If you want insight on why beauty counters are bustling when the rest of the mall is empty, or a fresh lens on how everyday indulgences can illuminate broader economic health, this episode cleverly connects pop culture, politics, retail, and real estate—all through the lens of makeup and the marketplaces that sell it.