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

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.

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."

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.