No Crocodile Tears for Alligators During a Recession

During times of recession Americans are less than keen on going shopping—no surprise here. Even when the economy is booming, most Americans never weigh the costs and benefits of buying alligator skin boots, belts or bags, wallets or watches. No matte

alligatorr how well the economy is doing, $2000 for Gucci alligator skin loafers or $100,000 for an alligator skin Birkin bag by Hermes, one of the most prominent players in exotic tannery business, never seems worthwhile. Apparently during recessions the wealthiest Americans are hit hard too—right in their $11,000 Burberry alligator skin wallets; but that’s just fine by the alligator population.

As it turns out, sales of alligator skin goods plummet during recessions. Economists first noticed this trend during America’s most recent financial crisis in 2009. There is little available data concerning alligator populations in the US, though experts generally believe that the total population has steadily increased since the 1970’s. Louisiana is home to one of the largest alligator populations in America, and the industry makes a somewhat significant contribution the state’s economy. Louisiana’s Department of Wildlife and Fisheries website has an entire menu section dedicated to its “Alligator Program” that’s separate from information about other wildlife. Maintaining a healthy commercial farming population requires alligator farmers to rent helicopters to scout nesting areas, wade into marshes to collect the eggs (and potentially confront angry female alligators), and invest considerable time and energy into raising them in captivity. Bottom line: if hides aren’t selling farmers are losing a lot of money.

During the Great Recession many, if not all, of the state’s alligator farms experienced serious liquidity issues and worried about their business’s solvency going forward because the prices tanneries and high-end fashion houses were willing to pay for hides dropped so quickly. This industry was affected so severely that Louisiana’s Alligator Management Program report since 2008 lists an asterisk next to the revenue data from that year stating, “Worldwide economic recession caused alligator hide demand to decrease dramatically.”


From 2002-2007 the total revenue from alligator hides increased sharply, reaching a peak value near $55 million. Total revenues decreased dramatically in 2008, rebounded slightly in 2009, and then dropped again in 2010; revenue fell to a fifth of what it was in 2007. These drops in revenue directly correspond to decreases in GDP the both Louisiana and the United States experienced in 2009.LAGDP

This correlation exists for earlier recessions as well. Commercial alligator farming was prohibited from 1965-1972 in an effort to protect the alligator population, so Louisiana only has data available beginning in the early 1970’s.  Quadrupling oil prices, high unemployment and a high inflation rate contributed to significant stagnation in the the U.S. economy from 1973-1975; alligator hide revenues in Louisiana also decreased by about 58% during this time. Revenues rose dramatically again in 1976, corresponding to an increase in GDP for both Louisiana and the U.S. The disparity was extreme: in 1975 revenues from farm alligator hide harvests totaled $3,597, compared to $34,259 in total revenue in 1976.

Alligator skin revenues in Louisiana dropped significantly again from 1981 to 1982, corresponding to another global economic slump in the early 1980s. USGDPWhen the stock market crashed in 1987 and the business cycle dipped from 1990-91, alligator hide revenues were along for the ride, stagnating from 1989 to 1990 and then decreasing sharply until 1992. Finally, total revenues decreased again from 2000 to 2001, which corresponds to a decrease in Louisiana’s GDP from 1999 to 2000, the burst of the bubble in 2000, and the September 11 terrorist attacks in 2001. Revenue from alligator hides in Louisiana is currently on the rise again, at a time when IPO valuations and the S&P 500 are reaching record highs.


It seems somewhat counterintuitive that a decrease in revenues from a luxury good would correlate so well with economic downturns. Only the wealthiest portion of the population can afford goods made from alligator hides, and people typically assume that they are insulated from economic recession or hardship. Yet, this niche luxury goods industry experiences significant declines during periods of economic recession. While it’s no great tragedy that someone won’t be able to purchase exorbitantly-priced shoes, it is perhaps comforting to note that recessions and financial crises force every man to tighten his belt, whether it’s made from alligator leather or elastic.

Clipping Coupons, Cutting Spending

When the economy sinks deeper, consumers tend to get creative about finding ways to cut on spending. 

Equipped with scissors, printers and shopping carts, in recent years many Americans have hunted for online coupons to save on products like canned soup, toothpaste and cookies.

While consumers print and clip their coupons, COUPONSeconomists closely watch their activity, trying to link it to economic growth or decline. 

Over the years, they have calculated that the more people print coupons, the worse the economic pressure they are feeling.

Originally intended as a form of advertising, coupons became a way for some customers to increase the value of their non-monetary exchange for groceries and goods. [Read more…]

Minimum wage hikes suggest optimism for economic growth

Garcetti announces his plan for a new minimum wage this Labor Day weekend. | LA Times

Garcetti announces his plan for a new minimum wage this Labor Day weekend. | LA Times

Los Angeles hotel owners got a jolt early this year when Mayor Eric Garcetti announced a plan to boost the minimum wage for 10,000 housekeepers, bellboys, janitors and other menial workers at the city’s largest hotels from $9 to $15.37.

Now Garcetti wants to bring that pay raise to all industries across the city, ultimately aiming to lift 567,000 people out of poverty. He said in a statement:

Our city has always enjoyed the greatest prosperity when everyone can afford to support themselves and contribute to our economy.

By improving the quality of life for the working class, the mayor also aims to boost the economy. Will it work? And conversely, what can the minimum wage tell us about the economy’s health? [Read more…]

Fashion Trend and the Economy in South Korea—Back to the Basics

Economy is interesting because it even affects what people wear. The most well-known fashion related economic indicator of all time is the Hemline Indicator, an idea that women’s hemlines are influenced by the macroeconomic performance. In other words, the shorter the skirt gets, the better the economy looks.

South Korea is currently struggling with economic recession. Its economy suffered its worst growth in more than a year during the second quarter of this year. The cloudy outlook for the economy in South Korea is therefore affecting latest fashion trends—people are going back to the basics.

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According to the data analysis that has been conducted by istyle24, one of the biggest online fashion retail store in South Korea, there was a huge rise in demand for basic fashion items. Comparing to last year, there was a 139% rise in classic tees, 78% rise in plaid/checkered shirts, and 54% rise in polos for men’s fashion items. Accordingly, the shop has also seen a 30% hike in basic tops and 42% rise in tanks in women’s items.

Moreover, the analysis also stated that there was a much higher demand in the market for white, black and gray color fashion items regardless of gender. Comparing to last year, fancier color such as pink, blue and orange items showed a 19% decline while there was a 21% growth in the market for achromatic color clothes.

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This interesting trend in the fashion market can be explained in a few ways. First of all, the price. Obviously people are having less money to spend on clothes and other luxury items due to economic recession.  Thus people are turning to something they can easily afford such as classic tees and basic tanks that are relatively cheap comparing to other kind of clothes. For instance, you can get a men’s v-neck tee that is as cheap as $3.80 at Forever 21.

Another big reason for growth in demand for basic style clothing is that they have high applicability. Consumers who now have less money to spend are not willing to take risks in buying clothes. In other words, people want to buy items that they know they will put on for sure instead of having to waste money on something that will be kept in their wardrobes forever. People in South Korea are basically taking advantage of inexpensive classic fashion items that can be easily matched with anything.

Whether it is the hemline or the t-shirts or whatever the fashion item may be, one thing we can know for sure is that economic recession makes people look less fancy.



Women As Economic Indicators

Women consumers are a driving force in the market place, constantly shaping market patterns and trends. While new fashion and beauty trends seem to constantly be surfacing, many of these fashion trends aren’t as random as once thought. Though the latest issue of Vogue many seem like a collection of designer ideas and fashion revolutions much of women’s style runs in cycles. Further research into these cycles has revealed economic ties to woman’s buying habits.

Lipstick_mainOne of the more widely talked about economic indicators tied to women is the lipstick index. Leonard Lauder argued “that during difficult economic times, women will increase purchases of lipstick and makeup and decrease purchases of higher priced goods like shoes and handbags”. There are two major theories that support why women would increase their makeup buying habits in hard economic times. The first of these theories looks at the self-esteem of women and the need to have luxury goods even when unaffordable. Women’s fashion is branded from a desire standpoint not a need standpoint therefore women view items like handbags and shoes as items that increase their self-value. While money may run short women’s opinions of their own self-worth does not diminish at the same rate. This leads to women seeking desire goods that fit their new price point, such as lip stick.
The second theory looks into the reasons why women buy makeup to begin with, with one of the main reasons being to increase their attraction level. A study conducted by a team of psychologists looked into this trend and noticed that as a recession occurred the number of men women found attractive decreased. This occurred for several reasons with the primary reason being women look for financial security in a partner as a major trait. Business Insider found that the “results of four separate experiments showed that women were likely to increase purchases of lipstick, perfume, and other products that might enhance their sex appeal.” While handbags and shoes might also enhance a women’s sex appeal, during economic downturn these expensive items fall into an unaffordable price range.

Women do not affect the market only with beauty sales but with fashion as well. George Taylor in the 1920s came across the Hemline Index. This index looks at the length of women’s garments juxtaposed to the state of the economy. In his research he found that the better the economy was doing the shorter the hemline fell on women’s clothing. Many economists have looked at this theory and found differing reasons. Some found that a longer hemline in economic downturn was a result of women wanting to appear more professional as they looked for jobs or tried to keep their jobs. This was backed up with dramatic length changes on women’s clothing during the 2008 financial crisis. On the opposite end other economist found that the shorter hemline in good economic times was a result of more disposable income being spent on partying and social use.

Women’s buying habits highlight a third economic indicator the High Heel Index. Dr. Trever Davis found that “Usually, in an economic downturn, heels go up and stay up – as consumers turn to more flamboyant fashions as a means of fantasy and escape”. While in the previous study it was shown that women tend to shy away from buying expensive items like shoes; this study has shown that those who still do purchase shoes purchase higher ones. The high heel has been correlated with a women’s confidence and an overall put together presentation. The association has led women to purchase higher shoes in harder times to in a way suppress reality.
Women have always been large consumers in the market place and studying their consumption patterns has given economist a different way of looking at the economy. While the standard economic statistics and figures are still used as the most credible way to gage the state of the economy looking at trends such as these provide a different perspective.