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Join today<\/a><\/p>\n \n Already a member? Walmart may be the siren before an economic storm<\/a> – at least that\u2019s what one financial<\/a> expert believes.<\/p>\n Economist Jim Paulsen calls his theory the \u201cWalmart Recession Signal\u201d (WRS). When Walmart\u2019s stock goes up and shares of luxury companies in the S&P Global Luxury Index go down, it\u2019s a sign that the country may be headed for a recession<\/a>. <\/p>\n \u201cAs economic activity slows and recession risk builds, retailing purchasing patterns tend to gravitate toward discounters like Walmart and away from overall or luxury retailers,\u201d Paulsen wrote in a Substack post<\/a> Monday. \u201cConsequently, a rise in the WRS could warn of a potential recession or at least a significant economic slowdown<\/a>.\u201d<\/p>\n And that warning is getting louder, he said. Just as it did before the Great Recession and two recessions in the 90s, the WRS is peaking. But this time, Paulsen believes the WRS is signaling a Federal Reserve<\/a> rate cut. <\/p>\n \u201cThe WRS currently indicates that rather than raise rates any further, the Fed may soon be forced to begin cutting the funds rate again,\u201d he wrote. <\/p>\n Paulsen\u2019s Walmart-led prediction of rate cuts and recessions is one of many offbeat indicators experts turn to predict the country\u2019s financial future. <\/p>\n The Lipstick Index is one such indicator, the Columbia University\u2019s Columbia Economic Review noted in a January article<\/a>. <\/p>\n Proponents believe that as the average consumer\u2019s wallet tightens, they skip expensive purchases like vacations and electronics and opt to splurge on reasonable things like lipstick. <\/p>\n \u201cSurprisingly, demand for lipstick increased right before the early 2000s recession, with people substituting buying more luxury items for buying lipstick,\u201d the Review wrote. <\/p>\n Another quirky crystal ball? Men\u2019s underwear, an indicator made popular by Federal Reserve Chairman Alan Greenspan, the Royal Bank of Canada wrote<\/a> in late 2025. <\/p>\n As consumers tumble into the first throes of a recession, they view men\u2019s underwear as a luxury and not a necessity. So, they pull back on their boxers-and-briefs spending, the bank said. <\/p>\n \u201cDuring the Great Recession, men\u2019s underwear sales experienced a significant drop, reflecting a reduction in consumer spending amid financial uncertainty,\u201d he wrote. <\/p>\n<\/p>\n In any case, Paulsen warns that relying on one indicator isn\u2019t a wise strategy. <\/p>\n \u201cThe WRS is but a single indicator and is not necessarily the definitive voice,\u201d he said.<\/p>\n
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An economist believes that America\u2019s biggest brick-and-mortar retailer may hold the secret to predicting if and when the next recession might hit (Reuters)<\/p>\n