As Trump unveiled his barrage of trade tariffs on virtually every major global economy, the stock market was left feeling the effects, and consumer confidence tanked. The threat of a recession looms over many countries, despite the fact it feels for many like we have been in one for months now. In the US, despite unemployment sitting at 4.2%, over half of consumers view the economy through a negative lens.
In and around a recession, the way consumers engage with brands and spend changes dramatically, and the effect of this economic uncertainty is already being felt globally.
Consumer confidence falls
At the beginning of April, The Evening Standard reported that businesses are ‘braced for a nosedive in consumer confidence’. At the same time, US consumer confidence fell to 92.9 for March 2024, hitting lows not seen since early 2021. As consumer confidence falls, EY data indicates that consumers are reassessing their choices, pushing brands to work harder to retain favour as consumers consider price, value and pack size, and the relevance of the brand itself.
Hemlines and hair
While we are not in a recession yet, social media commentators and consumers note that bellwethers of economic decline have been prevalent in our beauty, fashion and wellbeing choices for some time.
‘Recession blonde’, the rising trend of growing out your blonde highlights, creating a more defined root, and overall, darker do, has been reported on by Vogue and discussed widely on TikTok.
This is not a new phenomenon. The hemline index suggests that the popular length of skirts appears to rise or fall along with stock prices. It suggests that skirt lengths get shorter in good economic times and longer in downturns, such as after the 1929 Wall Street Crash, when many went from flapper to flowing.
Lipstick and little luxuries
However, this does not need to be a death knell for brands. Despite tightening purse strings, there are still certain things on which consumers will splurge.
The lipstick effect is the theory that consumers will still buy small luxury items even during an economic downturn. Be it a coffee as a treat, a pint with friends, or yes, lipstick, consumers still look to little luxuries for a dopamine boost, and to maintain the life they may have enjoyed pre-economic downturn.
Tapping into the idea of a ‘little treat, in a tough time’ in advertising could help boost consumer confidence in their brand and maintain a loyal audience, while also promoting positive sentiment towards a brand.
