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- Increased spending on personal care may reflect growing consumer confidence in the US.
- Retail sales exceeded expectations last month, hinting at a potential “self-care economy.”
- As the economy improves, consumers are gravitating towards more luxurious products.
The resurgence of long, lustrous hair and well-maintained skin suggests that the economic landscape is improving—or at least that American consumers are behaving as if it is.
A recent increase in retail sales and personal care expenditures indicates that individuals are beginning to indulge in luxuries they previously avoided due to recession fears and inflationary pressures.
Federal data shows that retail sales increased by 1.4% in August compared to the same month last year, surpassing economists’ predictions.
This upward trend has led Washington Post journalist Heather Long to coin the term “self-care economy,” which she discussed during an interview with Marketplace.
“This seems like a year for small indulgences,” Long remarked. “It’s a positive indicator for our economic health.”
Consumers often reward themselves after enduring challenging financial periods by upgrading their choices in goods and services, according to Peter C. Earle, senior economist at the American Institute for Economic Research.
An example of this trend is seen with the “Utah hair phenomenon,” which has gained traction on TikTok and other social media platforms following its exposure through Hulu’s popular reality show “The Secret Lives of Mormon Wives.”
A hairstylist recently shared with The Wall Street Journal that some women are investing up to $2,000 on human hair extensions and styling services to achieve coveted waist-length waves—a luxury that was less attainable just one or two years ago when personal care spending was lower nationwide.
Difficult economic times typically shift consumer behavior towards essential items only; people prioritize necessities like soap over specialized products during downturns, Earle explained.
The concept known as the “lipstick effect” suggests that affordable luxuries—like lipstick—see increased sales during recessions as consumers seek emotional boosts without overspending. As economic conditions improve, shoppers tend to regain confidence and expand their discretionary purchases beyond mere cosmetics.
According to September statistics from the Bureau of Economic Analysis adjusted for annual rates, US consumers allocated over $200 billion toward personal care products in Q2 2024—up from $199 billion in Q1 2024 and $193 billion during Q2 2023.
Earle noted a significant transition from basic necessities toward more luxurious offerings: “Consumers are now more inclined to invest in high-quality or premium personal care items they shunned during tougher times.” This includes upscale hair treatments or designer skincare brands previously deemed non-essential.
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