August 30, 2009

Underwear sales foretell economic trends?

Conventional measures of the U.S. recession may be no more accurate than the underwear index, which charts sales of men's underwear, a consumer researcher said.

The theory suggests that sales of men's underwear are stable -- as are sales of other necessities -- but during financial downturns sales drop off.

It's a prolonged purchase, Marshal Cohen, senior analyst with the consumer research firm NPD Group told The Washington Post. It's like trying to drive your car an extra 10,000 miles.

The research firm Mintel started tracking underwear sales in 2003 and found 2009 sales will probably fall 2.3 percent. The group predicts the drop will slow for 2010.

They say underwear sales are a good predictor because, since hardly anyone sees it, people feel they can delay purchasing new pairs.

Even former Federal Reserve chairman Alan Greenspan gave the theory credence when he was interviewed on NPR two years ago, the newspaper said.