Where Fashion Meets Finance
If there’s one thing 2025 has taught us, it’s that the economy is as variable as ever. Many factors cause the economy to fluctuate, including (to a degree) the fashion industry. What’s interesting, however, is that the fashion industry seems to be fluctuating alongside the economy.
The idea that fashion follows a similar trend as the market is called the hemline index. In short, this theory suggests that skirt lengths vary with economic conditions: shorter skirts with higher stock prices, longer skirts with lower prices.
I’m sure you’re all wondering what the reasons are for this correlation. Unfortunately, the hemline index cannot all be chalked up to the witchcraft of Wall Street fashionistas. More likely, the hemline index exists because of cost. As the economy prospers, fabric becomes more expensive and designers create shorter skirts.
There are other style-based predictors of the stock market– namely, the lipstick index. Lipstick sales tend to increase during recessions. The explanation for this market prophet is understandable: as prices rise, consumers buy more little luxuries instead of big-ticket items.
Watching these patterns made me wonder: what did the economy look like during some of the more popular recent trends?
The first thing that came to mind was the dramatic shift in popular style during the early 2000’s. Think juicy couture tracksuits, Paris Hilton… an all-together memorable time for fashion. Then, seemingly out of nowhere (maybe not nowhere but I’m taking journalistic license here since I was a kid), 2000’s minimalism hit. Calvin Klein was making headlines; simplicity and structure were back.
So how was the economy doing during all of this? This shift in style took place around 2008…nothing significant to note about the economy in that year!
The stock market crash led to a lot of cut-back on the blingy accessorizing, and consumers drifted towards minimalism. Minimalism is a trend that has stood the test of time- it just keeps coming back. No wonder it’s related to the stock market.
As the risk of recession in 2025 looms, we might want to brace ourselves for another wave of minimalism. I wonder if any of our favorite brands are lowering their hemlines for the 2026 seasons.
Check out @databutmakeitfashion and The Willistonian for more info about recession indicators in the fashion industry!
