Yahoo Finance Live anchors Rachelle Akuffo, Dave Briggs, and Seana Smith share three of the oddest economic indicators of a U.S. recession.
Video Transcript
SEANA SMITH: Let's talk a little bit more about inflation. We don't talk about it enough. But we're going to take a different angle here. The textbook definition of a recession, two consecutive quarters of negative GDP growth. A lot of the recession fears today having to do with inflation, but many experts weighing the term against a number of other measures, some of them a little unusual.
Let's take a closer look at some of these alternative ways to measure sentiment. And first up, I want to take a look at the Champagne Index. A couple of important things to point out here. Now, the pattern tends to go that champagne sells well in good times because people are excited, they're celebrating, willing to spend some money. Then sales fall during economic downturns.
Putting some numbers here to what we're seeing, consumption hit around 15.8 million bottles in '87, then crashed during the recession. That followed down to 10 million in '92. Similar with the Great Recession. When you look at 2007, 2006, 230-- or sorry, 23. 230 million, that would be a lot. 23 million bottles were consumed in 2006. That plunged to just over 12 million in 2009.
And Dave, 2022, the numbers out so far, it doesn't look that good. Now, we don't have the official numbers from the Champagne Trade Association yet because we're only just over halfway through, but the Nielsen IQ data showing wine sales have been falling every single month this year, comparing that to last year's number. In May, dropping 7%. June, dropping 8%.
DAVE BRIGGS: That's shocking, giving this is a record year for weddings.
SEANA SMITH: I know.
DAVE BRIGGS: I would have thought champagne sales would have been through the roof this summer alone.
SEANA SMITH: Not picking up the slack.
DAVE BRIGGS: My favorite indicator of a looming recession is the MUI. You haven't heard of that? It's the Men's Underwear Index. And that's not my theory. That's Alan Greenspan, the former Fed chair that did like to chart this in terms of a looming recession, because that's when men begin to cut back. They begin to say, OK, times are tough. I'm probably not going to upgrade the underwear. I'm going to stick it out, deal with a couple of holes, maybe some worn out undies, boxers, briefs, whatever you happen to prefer.
We saw it plummet 2007 to 2009. And you see it begin to recover again in 2010. That also happened in 2020 at the beginning of COVID. And I have to say, I didn't know this theory. I read about it this morning and thought, yep, I really have cut back this year on buying new underwear.