Can Fashion Forecast Economic Recession? History Says Maybe

As fears of a recession swirl in the background—fueled by rising gold prices, softening oil demand, consumer anxiety, and the current administration’s stop-start tariff policies—some people turn to fashion to read the tea leaves. But can style trends tell us where the economy is going?

It’s not as far-fetched as it sounds. Economists have long pointed to the Hemline Index, a 1926 theory by economist George Taylor that links skirt lengths to the stock market. Short skirts, the theory says, rise with economic optimism, while long skirts signal a downturn. The idea became popular during the Roaring ’20s, when flapper girls wore bold, raised hemlines amid the postwar boom. When the Great Depression hit, those flirty silhouettes gave way to more conservative, ankle-grazing designs.

Is it science? Not exactly. Is it possible to argue that fashion mirrors a society's emotional state during strain? Absolutely.

In the 2008 financial crisis, we saw the fall of flashy logos and the rise of Phoebe Philo’s quiet minimalism at Celine. Luxury turned subdued. Party wear became “workwear chic.” Business casual was suddenly club-appropriate — a wardrobe that said, “I can’t afford an outfit change.”

In 2025, we’re watching that cycle echo back.

Fashion brands are embracing muted palettes, low-maintenance wardrobes, and versatile silhouettes—an aesthetic shift that feels tailor-made for a more cautious, budget-conscious consumer. This mood has a name: “quiet luxury.” It’s taken over runways, TikTok feeds, and prestige TV wardrobes. Even blazers, slacks, and vests are now being jokingly—but not entirely unseriously—called recession indicators, not just by finance blogs but by influencers tapping into the collective vibe shift.

At the same time, a wave of “recession-core” content has emerged online, where fashion, beauty, and culture trends are reinterpreted as signs of economic unease. Take “recession hair” or “recession blonde.” On TikTok, users are reframing skipped touch-up appointments and growing-out roots as “old money elegance,” though it’s often just the cheaper alternative to salon upkeep.

Then there’s Hailey Bieber’s recent FILA campaign, fueling the discourse. In one image, she’s casually dumping iced coffee as groceries tumble from her arms. X users quickly labeled it “wasting food is the new flex,” a tone-deaf symbol of wealth in a moment when many Americans are stretching every dollar. Meanwhile, Klarna’s “Eat now, pay later” partnership with DoorDash drew similar backlash—its dystopian tone landed just a little too close to home.

So, how close are we to a recession? Economists are split. Goldman Sachs puts the odds at 45%. JPMorgan says 60%. Former Treasury Secretary Larry Summers recently warned that if one hits, it could leave two million more Americans unemployed and knock over $5,000 off household incomes.

Still, the job market remains solid, and official definitions haven’t yet been met. But consumer sentiment? That’s already falling. And where anxiety rises, fashion often speaks.

Fashion reflects how people adapt. We’re seeing a rise in capsule wardrobes, underconsumption-core, and trinket buying — slight, affordable pleasures in a time when big splurges feel risky. Even the return of officecore—blazers, slacks, the “I might be working three jobs” aesthetic—feels like a spiritual cousin to post-2008 “dress for everything” practicality.

In the end, Fashion doesn’t cause recessions. It doesn’t predict them in a statistically reliable way. But it acts as a mirror, reflecting how consumers feel — anxious, cautious, nostalgic — even before the data confirms it.

Calling every trend a recession indicator might be a joke. But the bigger truth is this: when people are nervous about the economy, they dress differently. They shop smarter. They choose longevity over flash. And their closets, knowingly or not, start sending signals, which economists would be wise to watch.