The Men's Underwear Index: A global economic barometer

27 August 2024, Mumbai

‘Men's underwear index’, a concept humorously coined by former US Federal Reserve chairman Alan Greenspan, suggests that sales of men's underwear can serve as an unconventional but telling economic indicator. The theory says that during economic downturns, men tend to delay replacing their underwear, leading to a decline in sales. Conversely, an uptick in underwear sales could signal the early stages of an economic recovery.

Pattern across the globe

While the index may seem lighthearted, it has garnered attention globally. The men's underwear index has been observed in various global contexts, offering anecdotal evidence of its potential validity. In the US for example, during the 2008 financial crisis, sales of men's underwear reportedly declined, aligning with the broader economic downturn. Similarly the ‘Lost Decade’ of economic stagnation in Japan during the 1990s saw a similar trend, with men's underwear sales remaining sluggish. The Eurozone debt crisis in the early 2010s also coincided with a dip in men's underwear sales in some European countries. These examples suggest that the men's underwear index might capture shifts in consumer confidence and spending patterns, particularly during periods of economic uncertainty.

A sign of economic turnaround in India?

Recent trends in India's innerwear industry seem to support the ‘men's underwear index’ theory. Leading companies like Page Industries (Jockey), Aditya Birla Fashion and Retail, Arvind Fashions, and Rupa & Co. have reported a consumption recovery in innerwear sales, particularly in the June quarter. This positive trend, coupled with other encouraging economic indicators like slowing inflation and a favorable monsoon season, suggests that India may be on the cusp of an economic turnaround.

Table: Q1 performance of innerwear companies in India

The growth in innerwear sales is attributed to various factors, including improved consumer confidence, increased footfalls in stores, and the expansion of e-commerce platforms. The industry is also benefiting from a revival in demand and efforts to improve inventory health at distribution hubs.

The resurgence of innerwear sales in India, along with other positive economic indicators, paints an optimistic picture for the country's economic future. While the ‘men's underwear index’ may not be a foolproof economic predictor, it offers an interesting perspective on consumer behavior and its potential correlation with broader economic trends. As India's innerwear industry continues to grow, it serves as a testament to the resilience of the Indian economy and its potential for a strong recovery.

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