What the Men's Underwear Index says about the global economy
As political and economic ebbs and flows have impacted global markets throughout history, economists have developed certain indicators to determine the growth and recovery of markets and consumer spending habits. One such indicator is the ‘Men’s Underwear Index’ (MUI).
What is the Men’s Underwear Index?
The Men’s Underwear Index has a history dating back several decades and is associated with former US Federal Reserve Chairman Alan Greenspan. According to the index, markets will note a decline in men's underwear sales if the economy is suffering a slump, and there is an upswing in sales when the economy improves, helping to determine the relative health of said economy. The idea is that men's underwear are a necessity in normal economic times and sales generally remain stable, so fluctuations in sales are more likely to reflect genuine changes in consumer behaviour rather than fashion trends or other external influences.
Evidence of the Men’s Underwear Index
Over the years the MUI has proven to be a surprisingly accurate reflection of economic trends through various slumps and highs.
During the global financial crisis of 2008, men’s underwear sales dropped significantly as a result of widespread economic decline and reduced consumer spending. As the economy slowly began to recover around 2010, men’s underwear sales gradually increased, indicating a rise in consumer confidence. This trend supported the proposal that the MUI could serve as an early indicator of economic recovery.
Similarly, as the COVID-19 pandemic caused widespread job losses and economic uncertainty, men’s underwear sales experienced a decline, again demonstrating the MUI’s ability to reflect broader economic trends.
That said, there is no one economic indicator that can single-handedly determine economic recovery, and the MUI is no exception, but its historical performance provides interesting insights into the relationship between consumer spending on necessities and overall economic health.
Predictions for the global economy
According to the International Monetary Fund (IMF), its baseline forecast is for the world economy to continue growing at 3.2% during 2024 and 2025, at the same pace as in 2023, with a slight acceleration for advanced economies, where growth is expected to rise from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025. Overall, the global economy has proven resilient recently, despite significant central bank interest rate hikes to restore price stability.
According to a recent study titled the Global Men's Underwear Industry Research Report, the global men's underwear market size was $22590 million in 2020 and is forecast to reach $36250 million in 2027, growing at a compound annual growth rate of 8.2% between 2021 and 2027.
These predictions indicate an upward trajectory in global markets and growth in consumer confidence and spending. Factors contributing to this growth are rapid global urbanisation, changing lifestyle patterns and major markets like China, India, Japan, and South Korea experiencing a surge in demand, driven by rising disposable incomes and a huge base of young spenders. Additionally, the growing influence of Western fashion trends and the expansion of e-commerce platforms are increasing easy access to a wide range of international underwear and apparel brands.