Underwear Index gauges China’s economy

By almost any measure, China’s economy is slowing. Consumers are cautious. Apartments are sitting unsold. Industrial profits are falling, too.

But China’s state media wants people to look at another indicator: men’s underwear.

Sales of boxers and briefs are surging in Liaoning province, according to The Global

Times, a fervently nationalist tabloid controlled by the Communist Party, bringing a bit of good news to a downand-out part of China’s rust belt that epitomizes many of the country’s economic problems. Cheered by the prospect of a brighter future, the article argued, Liaoning men are upgrading a part of their wardrobe that most of their friends and family will never see.

In highlighting such an unorthodox economic indicator,

The Global Times is hearkening to a long tradition of eclectic economic indicators, one that the general public and even some economists like to turn to when the usual yardsticks of the dismal science just won’t do.

But in the case of the Liaoning Underwear Index, economists are — to put it lightly — skeptical.

“The only relevant context here,” said Arthur Kroeber, managing director of Gavekal Dragonomics, a research firm, “is that China’s economy is slowing markedly and official media have been ordered to smear the pig with lipstick.”

The drive to find a measure that shows prosperity in one corner of China is perhaps understandable. Chinese leaders are contending with a steady flow of disappointing economic data that has affected confidence among consumers and investors; the country’s stock market has lost a quarter of its value this year. All the while, Xi Jinping, China’s top leader, is navigating a protracted trade war with the United States that, if it intensifies, could make the problem even worse.

Chinese officials have taken steps to insulate the public from the bad news, including censoring local media, while pledging to cut taxes and make other moves to cheer up businesses. The Global Times didn’t invent the Underwear Index. Once championed by Alan Greenspan, former chairman of the U.S. Federal Reserve, the Underwear Index was used by American media during the depths of the global financial crisis as a shorthand for a recovering economy. (The Underwear Index missed the recovery by about a year.)

Other unusual indexes have enjoyed varying degrees of success. For understanding exchange rates, there’s the Economist’s Big Mac Index. The Lipstick Index is considered an inverse indicator — when times are bad, goes the thinking, women spend money on lipstick rather than more expensive purchases such as clothing or shoes.