Amateur economic research enthusiasts and media story hunters have long used unconventional methods to detect economic trends. Usually these methods involve spurious correlations between a single industry and macroeconomics. Sometimes, a tenuous connection is drawn between the economy and seemingly unrelated events. Forbes, for example, recently released a list of “10 Quirky Indicators” to determine America’s economic future in 2013. One of the more quirky (and probably unreliable) examples was that when an older football team wins the Super Bowl, the market sees an increase for the rest of the year 80% of the time. The Ravens, originally from Cleveland, are an older team which would indicate that we can expect great things from 2013. That’s a level of tea leaf reading that even Carl Jung would have difficulty condoning.
One of the most famous of these curious economic indicators is the Men’s Underwear Index. The theory of MUI goes at least back to the 1970s, when Alan Greenspan, who would later become the Federal Reserve chairman, used the method to predict market trends.
Simply explained, the MUI theory proposes that men’s underwear is a flexible necessity. During times of economic growth, men buy underwear at a steady rate. When the economy is in decline, however, there’s a noticeable decrease in men’s underwear sales as guys try to stretch their old pairs longer without refreshing their drawers. Men’s underwear sales are said to act as a canary in a coal mine, letting us know that life is about to get tough before it actually happens.
So, does the Men’s Underwear Index work to predict economic trends? Sort of, but it’s becoming less effective.
That same Forbes article mentions MUI and predicts a bearish market because of the drop of the men’s underwear industry’s share in the larger men’s apparel industry from 3% in 2008 to 2.2% now. There are two major problems with this claim.
First of all, even if men’s underwear has less of a market share in the men’s apparel industry than it did in 2008, that doesn’t mean that men’s underwear sales are declining. In fact, The NPD Group, Inc., a leading market research company, reported that sales of underwear were improving at a rate of 6% a year. Forbes has misapplied the Men’s Underwear Index, mistaking market share for sales.
Secondly, even if it were true that men’s underwear sales are declining, the men’s underwear industry is different today than it was in the 1970s when Mr. Greenspan used the MUI. Men’s underwear isn’t just a necessity, it has become a preferred luxury. H&M is betting a lot on David Beckham’s line with expensive ads and videos, and the company is winning. There are well over 200 men’s underwear brands focusing on everything from basics to fetish wear, and more brands are getting started every year.
It’s not just a growing subculture. Mainstream audiences are becoming more interested in designer underwear than ever. If your average male wasn’t interested in brand name boxer briefs, then Calvin Klein made a costly blunder in debuting its first Super Bowl underwear ad this year. So far, the buzz following the ad has indicated that it was a success.
The men’s underwear industry is changing. In the 1970s, the MUI was a more reliable indicator of the country’s economic future because men didn’t care about designer underwear. Men either bought underwear or they didn’t buy it. Now consumers can choose designer underwear, budget multi-packs (which have seen significant growth in sales) or cheaper brands. Today, we have Calvin Klein, H&M, Andrew Christian and hundreds of other brands all fighting for new customers who want more than just a pair of whitey tighties. (The Underwear Expert, helping you to make sense of it all, would also not have been possible forty years ago).
Will there be correlations between underwear sales and the economy? Of course, but the connection is no longer unique, and it is less useful as an economic indicator. People will always look for signs to give them a glimpse into the future, to reassure and embolden or to brace and prepare. There are better ways to do this than to look at a quickly developing apparel industry. In the vast caverns of today’s economy, men’s underwear is not the canary that it once was. The Men’s Underwear Index may parrot the broader economic state, but it will not predict.