Recession in US? Growth of Lip stick index? tariffs on China for 245%? 90 day pause of tariffs! Stock market collapse! What else you need to say you are not moving towards recession?
Chill! You are not only the only person worried about that! the whole world is thinking about it especially IT companies. If you had seen recent news about TCS (one of the major IT provider based out of INDIA), the company of iconic TATA groups says they are facing uncertainty so no hikes for now, but whats the substitute to make employees happy? Promotions! Yes you heard them right! Imagine you getting promotion without salary? benefit? You can still use the new job title on other company for better pay. Lot of things are happening in the world. Regular family blog readers who are in touch with me, I can hear some of things running on your mind, where have you been this much days? are you still Alive?
Yes, i'm alive. Was busy a bit. I will try to post more content as usual like earlier when we started our site. There are lot of things going on my mind on what kind of topics to go for. Because there are readers who requested me to post topics related to UPSC, AWS, Machine learning etc.. I will try posting that soon in upcoming days based on time. For now, grab your favorite beverage (likely a nice cup of coffee or an drink)—it’s about to get interesting..
First, what is this recession?
At its core, a recession is like that awkward moment at a party when the music stops, and everyone looks at each other in uncomfortable silence🙊. Economically speaking, it’s defined as a significant decline in economic activity across the economy that sticks around for a while, usually marked by two consecutive quarters of negative growth in gross domestic product (GDP)—the fancy term for everything a country produces.
Ideally if economy is down for 2 quarters, then you can say you are moving towards Recession.
What about Lipstick Index 2025.:?
When the economy takes a downturn, consumers often tighten the purse strings. They skip the expensive designer shoes and opt instead for a treat that won’t cause buyer's remorse—like that little lipstick. This phenomenon allows them to maintain a sense of normalcy and luxury, despite the economic stressors around them.
During a recession, the Lipstick Index can actually serve as a barometer for economic sentiment. If lipstick sales are on the rise, it indicates that people may be feeling anxious about their financial situation but still want to invest in their appearance. It’s a little uplifting act that says, “I may not be able to go on vacation, but I can still look fabulous!”.
Now, recent reports suggests there is high increase in sales. So, this is one of the important factor from history
Anything from other history?
Let's time travel a bit. Time travel? yes, its possible in this A.I world sir. I'm not kidding though!
Recessions aren’t exactly new on the global scene. They’ve been strutting their stuff throughout economic history. Let’s peek at some of the big players:
The Great Depression (1929-1939): Picture this—sudden stock market collapse, massive unemployment, and people lining up for hours for a loaf of bread. It was a reality show called "Survival: 1930s Edition."
The 1973 Oil Crisis: With oil prices skyrocketing due to geopolitical tensions, it felt like the world collectively decided to tame its gas-guzzling cars. This resulted in inflation and angry drivers everywhere.
The Great Recession (2007-2009): Chances are you might have seen it! This one was a rollercoaster ride of epic proportions, initiated by risky mortgages and a crash that left people thinking, "Did I just lose half my life savings?" Spoiler alert: yes, yes you did. If you were working that time atleast for short point of time.
Indicators of Recession
Recessions often wave their “hello, we’re here!” flags with various telltale signs. Let’s dig into what to look for:
1. GDP Contraction
It’s like the economy’s diet plan gone wrong—two consecutive quarters of negative GDP growth mean that things aren’t looking rosy. Keep your eyes peeled for those reports; they’re the first red flags in this economic horror story.
Check the US GDP for past two quarters. As per the data available in BEA.GOV , GDP fallen last quarter, not that much.
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| Image credit : https://www.bea.gov/ |
You might have seen recent layoffs news. So far, as of writing this post 28,435 tech employees laid off ∙ 108 tech companies w/ layoffs, 79,616 gov’t employees laid off by DOGE and 156,858 total federal departures according to Layoffs.fyi a site which is tracking current layoffs. 2024 and 2023? Post COVID era you know bigger companies like Meta, Google fired more tan 20K people.
“Due to recent changes in global trade rules and tariffs, our operating expenses have gone up. To keep offering the products you love without compromising on quality, we will be making price adjustments starting April 25, 2025,” the statements from both companies said, according to Reuters.
Consumer spending insights derived from Bloomberg Second Measure analytics, which utilize billions of transactions from U.S. credit and debit cards, indicate that overall consumer spending growth in the United States has remained fairly consistent. As of March 31, 2025, this growth hovers around 1% year-over-year when analyzed on a trailing 28-day basis, aligning with the spending trends observed throughout much of 2024.
You can read the post here on their official website.
5. Business Investment A drop in business investment is the equivalent of pulling out of a growing flower garden. Companies become hesitant to spend money, leading to a stagnant job market and a halt in growth. 6. Manufacturing Indicators The manufacturing sector is a bit like a canary in a coal mine—if the canary stops singing due to declining production and orders, it’s time to pay attention.
Recent S & P reports shows there is slowdown in Q1 2025. 7. Tariff Wars
Tariff wars can feel like a sibling squabbling over the last slice of pizza. They disrupt trade relations, cause costs to rise, and leave consumers scratching their heads as they try to maintain their budgets. You know whats already happening. 8. Leading Economic Indicators (LEIs):
The Conference Board’s LEI is like a crystal ball for predicting economic activity. It includes future-looking indicators that help economists divine where we might be headed. Spoiler alert: it’s not always a sunny forecast!
What does US treasury data says?
The U.S. Department of the Treasury has published its Treasury International Capital (TIC) data for February 2025. The next update, which will include information for March 2025, is set to be released on May 16, 2025. In February, the total amount of foreign investments in U.S. long-term securities, short-term U.S. securities, and banking transactions resulted in a net inflow of $284.7 billion. This includes $229.3 billion from private foreign investors and $55.4 billion from foreign official entities. During this month, foreign investors boosted their purchases of long-term U.S. securities, totaling $142.7 billion. Out of this, private foreign investors bought $166.1 billion, while official foreign institutions sold off $23.4 billion. At the same time, U.S. investors increased their investments in long-term foreign securities, making net purchases of $30.7 billion. When adjustments are made, including foreign investments in U.S. stocks through stock swaps, the estimated overall net foreign purchases of long-term U.S. securities in February stood at $112 billion. Foreign investors also raised their holdings of U.S. Treasury bills by $73.2 billion. Additionally, the total amount of dollar-denominated short-term U.S. securities and other custody assets held by foreign investors grew by $79.9 billion. Finally, banks’ own liabilities in dollars to foreign investors increased by $92.8 billion.
You can read complete data here on their official site at https://home.treasury.gov/news/press-releases/sb0091
Key Takeaways:
First and foremost this data is of Feb, but most of trade war started in March, so its upto you to consider. I will try to break things down..
- Consumer spending growth may be holding steady at around 1% year-over-year, but it feels a bit like that friend who's hesitant to splurge on a night out. This cautious approach often signals uncertainty, suggesting that many consumers are keeping an eye on their budgets, perhaps asking themselves, “Do I really need that extra pair of shoes?”
- The substantial net inflow of foreign investments into U.S. securities reflects a certain trust in the U.S. economy. However, if those foreign investors start to second-guess their decision—say, like when you look at your stock choices in a volatile market—we could see a decrease in capital inflows, which wouldn’t be good news for anyone.
- When foreign investors ramp up their purchases of U.S. Treasury bills, it’s a bit like grabbing a comforting blanket during a chilly night. Investors are signaling a preference for safety amid market uncertainty. This could imply that they’re feeling cautious about the economic landscape ahead.
- The rise in banks' dollar-denominated liabilities indicates they're increasingly reliant on international borrowing. In a recession, this dependence could create liquidity challenges, much like trying to make it through a week with an empty refrigerator. If the economy stumbles, it could impact consumers and businesses alike.
- While there's a notable increase in foreign purchases of long-term U.S. securities, economic instability could lead to a slowdown in these investments. Think of it like someone weighing the pros and cons of committing to a long-term plan—when uncertainty looms, some might choose to wait and see.
