Labubu Has Become An Indicator For TheEconomy

If you’ve walked down main streets, been to airports, or opened TikTok in recent months, you’ve probably seen some small… cute… and slightly creepy little creatures hanging from bags. Labubu.
Behind every Labubu… there may be a message about the state of the economy.

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THE LABUBU PHENOMENON

For those who don’t know them, Labubu are the creation of Hong Kong artist Kasing Lung, inspired by elements of Scandinavian mythology. They were first designed 10 years ago, but have become a global trend in recent times.

The reason? Celebrities like BLACKPINK’s Lisa and Rihanna literally put them on their hand… or rather, on their bag. And as always happens, once celebrities touch something, the rest of the world rushes to get it.

Their price? From $20 to $40. Not dirt cheap, but certainly more affordable than a Louis Vuitton bag at $2,000.

And here’s our first clue. Labubu isn’t just a toy. It’s affordable luxury — something that makes you feel like you belong to a more “high-end” circle without completely emptying your wallet.

A RECESSION SIGNAL

And what could that have to do with the economy?

Well, if you think this is just an innocent trend, think again.

Analysts have observed for years that during times of economic uncertainty, when consumers feel squeezed, purchases of small, inexpensive luxuries increase.

Why? Because we cut the big expenses. We forget about the expensive trip, the new car, or the house. But… we all still want a little dopamine. And we find it in something smaller and “safe,” like a Labubu.

The problem is that this kind of consumer shift has historically been linked to low consumer confidence. And when confidence drops… recession often follows.

And to understand how serious this is, we need to talk about an indicator that many may be hearing for the first time: the Lipstick Index.

THE LIPSTICK INDEX

Leonard Lauder, CEO of Estée Lauder, noticed something strange in 2001. While the economy was in recession, lipstick sales were going up.

Lipstick is the perfect “affordable luxury” because (a) it doesn’t cost as much as an expensive bag, (b) it gives us a sense of care and luxury, and (c) it lifts our mood.

Examples that confirm this:

• 2001 recession: Lipstick sales increased.

• 2008 crisis: L’Oréal, Revlon, Estée Lauder reported stable or rising sales.

• Covid-19: Initially sales fell due to mask-wearing, but in the second half of 2020 and into 2021, sales boomed as people wanted to regain a sense of “normality.”

The pattern is clear: When wallets are tight, people turn to small pleasures — and Labubu is Gen Z’s lipstick.

Of course, all this is part of something bigger. Nowadays, consumers cut back on essentials (fewer restaurant visits, more own-brand products at supermarkets), but still spend money on “treats” — hence the term Treatonomics.

And as experts say, this mindset will be with us for at least another 3–5 years, because we are living in an era of Great Uncertainty.

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