Market makeup test

Lipstick sales are down — good news for those who see cosmetics sales as a leading economic indicator. In a survey of affluent consumers conducted by Unity Marketing in Stevens, Pa., sales of beauty products, including lipstick, began to decline in the second quarter after soaring during the economic downturn last year. Researchers at the marketing consulting firm, which tracks luxury spending, think that the data support the idea of “the lipstick effect,” a concept popularized by Leonard Lauder, chairman emeritus of The Estée Lauder Cos. Inc. of New York. He contended that in tough times, women will often spend money on affordable luxuries such as lipstick instead of buying expensive clothing and jewelry. In its quarterly survey of 1,000 to 1,200 affluent consumers who have annual household income of $100,000 or more and who bought at least two luxury items during the quarter, respondents said that they spent less on more affordable beauty products and more on home decorating. Money spent on luxury items for the home rose 17.6% in the second quarter from the first quarter, the firm reported. “People spending more on their home is one good measure that we are in recovery from the recession,” Pamela Danziger, president of Unity Marketing, said in an interview. “They are releasing pent-up demand in terms of products for their homes.” At the same time, spending on beauty products dropped 13.5% during the second quarter from the first quarter, the firm said. The decline is a telling reversal from last year, when consumers spent an average of 34% more on lipstick and other face care items such as cleansers, toners and moisturizers, the firm said. For further evidence that the economy is improving, Ms. Danziger pointed to Unity Marketing's Luxury Consumption Index, a monthly calculation based on luxury spending habits, which rose to 74.3 in June, from a low of 40.3 last September.