As fall 2018 ready-to-wear collections roll out, a look at the hemlines suggests the economy and Wall Street might be headed for some tough times. Or so goes the folklore of investors who follow the “hemline theory.”
The theory, developed in the Twenties by a Wharton School of Business economist, goes like this: When the hemlines rise, so does the stock market. And when hemlines drop, watch out. The theory held water in the Sixties when the miniskirt made a splash on the fashion scene and the market rose, and then again in the Eighties under the Reagan administration. The Dow Jones Industrial Average also rose after the recession in the early Nineties. And hemlines and stocks again rose in the four years leading up to the Great Recession.
This time around the indicator has not been as pronounced, but during fall 2017 shows a year ago, designers and brands such as Blumarine along with Sébastien Meyer and Arnaud Vaillant showcased miniskirts in their collections. And by the fall, fast and mass fashion were heavily touting miniskirts online and in stores.
Forever 21, for example, emphasized crushed velvet and camo front-zippered minis while Express offered several styles including a ruffled pocket version. And Asos pushed denim and checked-pattern minis. The mini momentum continued through the early winter, and included bloggers in support of the trend. Last month, The Moptop even posted a blog offering tips for wearing minis in the winter.
And like the lore foretold, the stock market went on a tear.
From the time of the fall 2017 collections until the last week in January, the Dow Jones Industrial Average rose a whopping 33 percent to over 26,616 from 20,071. But as Feb. 1 rolled around, the market experienced a series of declines that were some of the worst in the index’s history. And true to form, RTW collections for fall 2018 have been chock full of longer hemlines from Grey Jason Wu, Rodarte, Rachel Zoe, Proenza Schouler and Acne Studios, among others.
But investors might not want to panic just yet. There’s also the “Super Bowl Indicator” to consider, which suggests that a win by a team in the National Football Conference means it will be a good year for stocks. A win by an American Football Conference team suggests a bear market. And thanks to the NFC’s Philadelphia Eagles win this past Sunday, the market might fare just fine.
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