Lady Gaga, Low-Rise Jeans, and the Next Recession

Summary

The Journal: Lady Gaga, Low-Rise Jeans, and the Next Recession
Released: May 23, 2025

Hosts: Ryan Knutson and Jessica Mendoza
Produced by: The Wall Street Journal & Gimlet, in co-production with Spotify

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Introduction to Gen Z's Recession Indicators

In the latest episode of The Journal, hosts Ryan Knutson and Jessica Mendoza delve into an intriguing trend among Gen Z: the identification of unconventional recession indicators rooted in pop culture. Jessica Mendoza opens the discussion by drawing parallels between nostalgic trends and economic forecasts:

[00:05] Jessica Mendoza: "What do Lady Gaga flash mobs and low-rise jeans have in common? They're all things I thought were cool 15 plus years ago. They're also back not just as trends, but as harbingers of doom or what young people are calling recession indicators."

Hannah Aaron Lang, a colleague who writes about financial markets, highlights how Gen Z leverages platforms like TikTok to seek economic insights:

[00:38] Hannah Aaron Lang: "I've just searched recession indicator on TikTok. I mean, there's dozens of videos."

Traditional vs. Non-Traditional Economic Indicators

The hosts explore the distinction between conventional economic indicators and the more eclectic signs that Gen Z observes. While traditional indicators like unemployment rates and stock market performance are well-established, Gen Z's approach incorporates elements from everyday life and pop culture.

[05:11] Jessica Mendoza: "Other traditional indicators of a coming recession include rising credit card delinquencies, a slumping stock market, and more complex measures like the yield curve, which measures the relationship between short and long term government bond yields."

Hannah acknowledges that while correlation does not imply causation, observing these unconventional indicators can still offer valuable insights:

[01:07] Hannah Aaron Lang: "Anytime you bring up a conversation like this, economic data wonks are going to tell you that correlation does not equal causation, right? But that being said, a correlation can still be interesting to look at."

Case Study: Fashion Trends as Economic Signals

A significant portion of the episode is dedicated to examining how fashion trends can serve as economic indicators. The hosts discuss historical concepts like the Hemline Index and the Lipstick Effect, which theorize that fashion choices reflect economic sentiments.

[07:01] Jessica Mendoza: "That recession indicator is known as the lipstick effect, though it's been pretty much debunked at this point. But it's not the only beauty or fashion related indicator out there."

Highlighting modern interpretations, data analyst Madhe La Puerta is featured for her unique approach to analyzing fashion trends as economic predictors:

[08:14] Madhe La Puerta: "So if I'm saying, you know, the Burberry bikini is in, I don't want to just say that. I want to tell you, you know, like, it's increased, you know, X percent in popularity this past week."

Mendoza recounts a viral Instagram post by Madhe that analyzed the resurgence of maxi skirts:

[09:16] Jessica Mendoza: "This past March, Madhe made a post about recession indicators that went particularly viral. She analyzed data about current trends in hemlines and lipstick and she found that they were growing in popularity. Long skirts or maxi skirts were particularly trendy, up by almost 400%."

Despite initial skepticism, the trend coincided with a significant stock market drop:

[09:55] Jessica Mendoza: "But a couple weeks later, the stock market did tank and in the aftermath, Mad's post blew up."

Madhe reflects on the unexpected accuracy of her analysis:

[10:05] Madhe La Puerta: "It was nice to see that the fashion trends did have some validity there. Yeah."

Consumer Sentiment and Economic Confidence

The conversation shifts to the broader implications of consumer sentiment on the economy. Hannah explains the critical role consumer spending plays, constituting approximately 70% of the U.S. economy:

[14:22] Hannah Aaron Lang: "Consumer spending is so important because it's like 70% of the US economy, right? So that's sort of what economists are watching for."

Despite low consumer confidence, spending hasn't slowed as expected:

[14:57] Hannah Aaron Lang: "Consumer spending hasn't slowed down despite consumer sentiment being at near record lows."

The Impact of Discussing Recession on the Economy

An intriguing aspect explored is the psychological impact of constantly discussing recessions. The hosts posit that frequent mentions of economic downturns can lead to a self-fulfilling prophecy, where the fear of a recession causes behaviors that may trigger one.

[16:05] Hannah Aaron Lang: "There's this awareness that if you talk enough about how things are going to be bad further down the line, then people might start to prepare, they might start to pull back their spending."

Jessica adds a critical perspective on whether economists themselves rely on "vibes" akin to Gen Z's indicators:

[14:10] Hannah Aaron Lang: "Economists use vibes-based data all the time. We call it consumer sentiment and consumer confidence."

Conclusion and Final Thoughts

Wrapping up, the episode underscores the significance of Gen Z's approach to economic indicators as a reflection of their unique perspective on the economy. While traditional metrics remain vital, the infusion of cultural and social elements offers a fresh lens through which to understand economic sentiments.

[16:45] Jessica Mendoza: "Perhaps the biggest recession indicator of them all is that we are talking about recession indicators so often."

The discussion concludes with a contemplation of how widespread anxiety about a potential recession among young people highlights deeper economic challenges that may not yet be fully captured by conventional data.

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Notable Quotes:

• Jessica Mendoza [00:05]: "What do Lady Gaga flash mobs and low-rise jeans have in common? They're all things I thought were cool 15 plus years ago. They're also back not just as trends, but as harbingers of doom or what young people are calling recession indicators."

• Hannah Aaron Lang [05:11]: "We call it consumer sentiment and consumer confidence. You know, like we use this regularly and you know, we report on it here at the Journal."

• Madhe La Puerta [09:55]: "This is not the first time I posted about recession indicators, but it's definitely the first time it's taken off this largely or this extremely."

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Final Notes:

This episode of The Journal offers a compelling exploration of how younger generations interpret economic signals through the lens of culture and trends. By blending traditional economic analysis with Gen Z's innovative approaches, the hosts provide a nuanced understanding of contemporary economic sentiments and their potential implications for the future.

Transcript

[Jessica Mendoza]

What do Lady Gaga flash mobs and low rise jeans have in common? They're all things I thought were cool 15 plus years ago. They're also back not just as trends, but as harbingers of doom or what young people are calling recession indicators.

[Hannah Aaron Lang]

There's a million recession indicators, but my number one right now is how many a list celebrities are doing commercials, tickets.

[Jessica Mendoza]

To Coachella a week before Coachella, which is crazy. That's a recession indicator.

[Hannah Aaron Lang]

Opening Instagram like, damn, everyone got their.

[Jessica Mendoza]

Master'S degree this year.

[Hannah Aaron Lang]

Congratulations. But also recession indicator. I've just searched recession indicator on TikTok. I mean, there's dozens of videos.

[Jessica Mendoza]

Our colleague Hannah Aaron Lang writes about financial markets and she became fascinated with the idea that Gen Z is looking for economic insight in unexpected places.

[Hannah Aaron Lang]

There's a video with the caption recession indicators. You may not have noticed my top five recession indicators.

[Jessica Mendoza]

Oh my gosh.

[Hannah Aaron Lang]

Recession trend predictions, the biggest recession indicator. And these are all just from like, these are not, you know, news anchors or news outlets. Like, these are all everyday people sharing their thoughts on this.

[Jessica Mendoza]

Some economists might be offended by the idea that low rise genes are somehow related to the nation's financial health. And they'll be ready to shut the argument down with an old truism.

[Hannah Aaron Lang]

Anytime you bring up a conversation like this, economic data wonks are going to tell you that correlation does not equal causation, right? But that being said, a correlation can still be interesting to look at. We are not in a recession by traditional measures and the economy by the measures we have looked at over the course of history, looks to be in a pretty good place right now. But the economy is so often about how people are feeling, right? How secure they feel, how optimistic they are about their financial future. And, you know, I guess there's something to be said for like, why wouldn't those feelings be reflected in fashion or film or any other aspect of pop culture?

[Jessica Mendoza]

Welcome to the Journal, our show about money, business and power. I'm Jessica mendoza. It's Friday, May 23rd. Coming up on the show, what Gen Z's recession obsession can actually tell us about the economy. Hannah, what generation do you identify with?

[Hannah Aaron Lang]

I think I would qualify myself as older Gen Z. Aha.

[Jessica Mendoza]

Gen Z is the generation born between 1997 and 2012.

[Hannah Aaron Lang]

I also identify as like, culturally Gen Z. I think if you spend enough time in certain parts of the Internet, I think I have a Gen Z sense of humor. I guess I would say, well, then.

[Jessica Mendoza]

This is gonna be perfect. We'll be representing two generations. I'M solidly a millennial, so you're just gonna have to walk me through this whole situation. Please hold my hand.

[Hannah Aaron Lang]

That's okay.

[Jessica Mendoza]

Gen Z has good reason to be anxious about the economy. Some of their most formative years have been colored by economic turmoil. Many of them were kids during the Great Recession of 2008, and some of them were going to college or taking their first steps into the real world right when the pandemic hit. Nowadays, the fear of yet another recession is everywhere.

[Hannah Aaron Lang]

Well, fears of a recession have been.

[Jessica Mendoza]

Triggered after the US economy shrunk in.

[Hannah Aaron Lang]

The first quarter of 2025. President Trump refused to rule out possibility.

[Jessica Mendoza]

Of the US entering a recession. New fears of a possible recession on the horizon. The Dow losing 876 points after falling 10. Hannah, can you define a recession and describe why they're so scary?

[Hannah Aaron Lang]

A recession is a kind of prolonged period of the economy shrinking rather than growing. And for everyday Americans, that means, you know, the unemployment rate goes up, more people lose their jobs, they have a harder time, you know, supporting their families, and lots of folks across the start to pull back their spending because, you know, times are really tough. As anybody who lived through, you know, the Great Recession or those, you know, scary months in 2020 would tell you, it's not. It can be a very scary time for Americans and their finances.

[Jessica Mendoza]

And on that note, what is a recession indicator? I mean, are these just like portents of a bad time coming?

[Hannah Aaron Lang]

In the traditional sense? This is an economic indicator that could tell us that a recession is on the way. So I, I think like a really classic example of this would be like a rising unemployment rate.

[Jessica Mendoza]

Other traditional indicators of a coming recession include rising credit card delinquencies, a slumping stock market, and more complex measures like the yield curve, which measures the relationship between short and long term government bond yields. But some of that data takes a long time to accumulate. So it can represent an outdated picture of the economy, which can lead those looking for answers about what's happening now to go looking elsewhere for signs.

[Hannah Aaron Lang]

This habit of looking for economic clues in more unusual places is not a new one. Right? Economists, investors have been doing this for a really long time, trying to find kind of other places that could supplement the information we already have about the economy, maybe offer a hint about what's to come before other kind of lights on the dashboard start flashing red.

[Jessica Mendoza]

Some of those supplemental figures that actual economists turn to can be surprising.

[Hannah Aaron Lang]

The men's underwear index is weird but real. When guys hold on to old underwear longer than usual, economists Say it's a sign they're cutting back on spending.

[Jessica Mendoza]

The underwear index is a theory floated by former Federal Reserve chair Alan Greenspan.

[Hannah Aaron Lang]

With the idea being that your budget starts getting a little tighter in the household, you start to think of where to cut back. Well, maybe not a ton of people are gonna see that you're wearing really old underwear. So if, you know, these sales were to plummet, that could be a sign that folks are really starting to feel the pinch in their wallets. Women's beauty trends could be another example of this. So one thing I saw cited a lot was when times are tough, women might not have as much money to spend on, say, a new wardrobe or some other upgrade to their look, so they splurge on small luxuries like a tube of lipstick, for example.

[Jessica Mendoza]

That recession indicator is known as the lipstick effect, though it's been pretty much debunked at this point. But it's not the only beauty or fashion related indicator out there.

[Hannah Aaron Lang]

Another really long standing quote unquote indicator in the fashion world, the hemline index, which kind of talks about the lengths of women's skirts as it relates to the economy and whether or not times are tough.

[Jessica Mendoza]

The hemline index posits that harder economic times call for longer skirts. As the stock market goes down, so do hemlines.

[Hannah Aaron Lang]

And this one dates back to literally the beginning of the 20th century. And the kind of like the example from that period would be kind of like the 1920s. The Flapper Girls. Yeah, shorter skirts. And then, you know, that that tide shifted a little bit in the 1930s as we entered the Great Depression. I don't think it quite bears out as you, you know, step more into modern fashion history. But that being said, you know, some might say that the economic vibes are bad right now and maxi skirts are back in style. So that information, what you will.

[Jessica Mendoza]

Gen Z is out there crunching those numbers right now, or some of them are anyway. Like data analyst Madhe La Puerta, if.

[Madhe La Puerta]

You'Re wondering whether we're headed towards a recession, why would you analyze the stock market when you can just analyze fashion trends? Because over the last 100, I think of it as like a fashion blog, but whenever I make claims, I try to back them up using analytics Mate.

[Jessica Mendoza]

Runs the Instagram account data. But make it fashion.

[Madhe La Puerta]

So if I'm saying, you know, the Burberry bikini is in, I don't want to just say that. I want to tell you, you know, like, it's increased, you know, X percent in popularity this past week.

[Jessica Mendoza]

And such.

[Madhe La Puerta]

So, yeah, a fashion Trends fashion analytics blog.

[Jessica Mendoza]

How many followers do you have now?

[Madhe La Puerta]

I have a little bit over 500,000.

[Jessica Mendoza]

Wow. This past March, Madde made a post about recession indicators that went particularly viral. She analyzed data about current trends in hemlines and lipstick and she found that they were growing in popularity. Long skirts or maxi skirts were particularly trendy, up by almost 400%. Madae posted that statistic on her Instagram along with a picture of the Sex and the City character Charlotte Yorke.

[Madhe La Puerta]

Charlotte was like looking a little bit concerned and so it just worked really well to be like, oh no, like maxi hemlines are up in popularity. Does that mean we're headed into a recession?

[Jessica Mendoza]

Made also wrote, quote, we are probably definitely headed into a recession in the comments. Some people rolled their eyes at her conclusion.

[Madhe La Puerta]

Well, you know, this woman doesn't know.

[Hannah Aaron Lang]

What she's talking about.

[Madhe La Puerta]

This is all made up.

[Jessica Mendoza]

But a couple weeks later, the stock market did tank and in the aftermath, Made's post blew up.

[Madhe La Puerta]

This is not the first time I posted about recession indicators, but it's definitely the first time it's taken off this largely or this extremely.

[Jessica Mendoza]

The post now has over 200,000 likes and has been shared more than 20,000 times. Did you feel like you called it?

[Madhe La Puerta]

I mean, I would never, I would never, you know, give myself that big of a pat on the back. I don't know if I would say I called it, but I would say I was. It was nice to see that the fashion trends did have some validity there. Yeah.

[Jessica Mendoza]

After the break, Gen Z goes gaga over recession indicators.

[Madhe La Puerta]

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[Trina Menino]

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[Hannah Aaron Lang]

Gen Z has definitely taken this to the next level and found some very unusual, quote, unquote recession indicators. I would say they're finding them just about everywhere.

[Jessica Mendoza]

That's my Gen Z colleague, Hannah Aaron Lang.

[Hannah Aaron Lang]

Again, this has included everything from low rise jeans coming back to flash mobs. And like Lena Dunham leaving New York. Like, it's a really extensive list of, you know, what these people on the Internet are now calling signs or potential signs of an oncoming recession or economic downturn.

[Jessica Mendoza]

Another big recession indicator the youths are talking about is what they call recession.

[Hannah Aaron Lang]

Pop, which is, you know, the idea that pop music is becoming upbeat and super danceable again because times are tough and people need an escape. And the last time that happened was 2008 with, like, Lady Gaga's Just Dance.

[Jessica Mendoza]

Which was a jam, by the way.

[Hannah Aaron Lang]

Yes. Well, and if you think about it, like, the theory kind of holds because you think about that and you're like, okay, this song was released literally, you know, the Great Recession was happening. And the lyrics are just dance. It's going to be okay. Like, that's really interesting. Right?

[Jessica Mendoza]

Yeah.

[Hannah Aaron Lang]

And the idea is that, you know, that that's happening again. Not only is Lady Gaga herself making dance pop music again. Right.

[Jessica Mendoza]

She just came out with a new album.

[Hannah Aaron Lang]

Right, exactly. But that her kind of artistic descendants are making similar music. So, you know, Charl Xex or Chapel Roan might fall into that category.

[Jessica Mendoza]

Maybe it's because I'm a millennial, but I found it a bit hard to parse through all these recession signs. I mean, even among the types of recession indicators, right, like longer hemlines, longer skirts, suggesting the possibility of a recession, but also, like, club music. It's kind of like, who's going to the club in a. I mean, maybe they are. I'm not cool enough, but in a maxi skirt, really, like, at this point, it seems kind of od.

[Hannah Aaron Lang]

Well, they might have said, who's going to the club in a blazer?

[Jessica Mendoza]

Oh, God, don't remind me. Corporate wear at the club was such a thing. The simultaneous return of long skirts and dance music could be a recession indicator, or maybe it's just the cyclical nature of trends. But either way, there's something to be said about the fact that people are making these connections at all, especially since we're not in a recession.

[Hannah Aaron Lang]

If young people are quick to believe that we're headed for a recession, that a recession is imminent despite economic data itself painting a different picture right now, then I think that does tell us something about how young people are experiencing the economy and that, you know, there are real challenges.

[Jessica Mendoza]

And then just kind of like playing a little bit of a devil's advocate here.

[Hannah Aaron Lang]

Mm.

[Jessica Mendoza]

Don't economists. And not to. Not to belittle the profession and their expertise or anything, but, like, don't economists make predictions based off vibes Too.

[Hannah Aaron Lang]

Economists use Vibes based data all the time. We call it consumer sentiment and consumer confidence. You know, like we use this regularly and you know, we report on it here at the Journal. I should mention here that consumer spending is so important because it's like. But it's 70% of the US economy, right? So that's sort of what economists are watching for. When that spending slows, that becomes a real problem for the economy, which is why we watch sentiment. But recently the case has been that negative sentiment doesn't always mean that people are going to stop spending. For example, this has kind of been.

[Jessica Mendoza]

The theme of the past few months. Consumer spending hasn't slowed down despite consumer sentiment being at near record lows. But there's also the reality that the more we talk about a recession, the more likely it is that people start preparing for a recession which could eventually lead to an actual recession.

[Hannah Aaron Lang]

Like regardless of whether or not you think low rise jeans can predict the next economic downturn. I think the fact that many Americans find it believable that we could be entering a recession sometime soon is, you know, an important piece of information about how people, everyday people are experiencing the economy. And I should also add too that, you know, in circles on Wall street or economists, you know, folks that debate this on a daily basis in a more professional way that, you know, there's all this reticence about even saying the word recession. It's why people on Wall street call it the R word, which is really quite strange. But it's because by speaking about a recession or you know, constantly discussing the prospect of an economic downturn, it, you.

[Jessica Mendoza]

Know, there's this, it becomes a self fulfilling prophecy.

[Hannah Aaron Lang]

Yes. There's this awareness that if you talk enough about how things are going to be bad further down the line, then people might start to prepare, they might start to pull back their spending. Right. And that could create the very recession that we had feared. So I think that's an interesting piece of that as well. That perhaps the biggest recession indicator of them all is that we are talking about recession indicators so often.

[Jessica Mendoza]

That's all for today. Friday, May 23rd. The Journal is a co production of Spotify and the Wall Street Journal. The show's made by Kathryn Brewer, Pia Gadkari, Carlos Garcia, Rachel Humphries, Sophie Codner, Ryan Knudson, Matt Kwong, Kate Linebaugh, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Allen Rodriguez Espinosa, Heather Rogers, Pierce Singhi, Jeevika Verma, Lisa Wang, Catherine Whelan, Tatiana Zemis and me, Jessica Mendoza, with help from Trina Menino. This is Trina's last week working with us. Thank you for everything, Trina. We wish you well. Our engineers are Griffin Tanner, Nathan Singapok, and Peter Leonard. Our theme music is by so Wiley. Additional music this week from Katherine Anderson, Peter Leonard, Bobby Lord, Emma Munger, Nathan Singapok, Griffin Tanner, so Wiley. And Blue Dot Sessions. Fact checking by Mary Mathis and Amelia Schonbeck. Thanks for listening. We're off on Monday for Memorial Day. We'll be back with a new episode on Tuesday. See you then.