My goal is to help people avoid getting hurt by economic catastrophes. But most people are terrified of economics. It feels like you need a Ph.D. in econometrics and the brain of a mathematician to understand any of it. If even the experts keep failing to read the economy right, what hope is there for a regular person? The answer is The House of Gucci. Yes. Fashion and film. Art in all its forms is a great source of signals about the world economy. Marshall McLuhan called artists the “Early Warning System of society.” Ezra Pound called artists “the antennae of the race.” If you want to know where the economy is going, follow the artists. As you hit the Black Friday sales, think about what the designers are trying to tell you.
I introduced this notion of signals in my 2016 book of the same name: Signals. In it, I argued that the world economy usually gives us hints about its likely course of events well before there is enough data to confirm the outcome. Black swans are genuinely rare. When we get surprised it’s because we weren’t looking or because we willfully believed we already knew how it was all going to play and ignored the obvious signs and signals. How many said, Brexit would never happen? Or, Trump would never win? Or, China was the best place to deploy capital? Certainty kills the capacity to act in advance or to catch the opportunity before prices move. Certainty blinds us to signals.
Signals illuminate a valuable space between us and the problem. These hints about the future are invaluable. It will seem silly to mathematical economists and analytical types to suggest that we can judge where we are going by looking at how people dress. But, fashion tells us a lot. Right now, Balenciaga is selling a high-viz yellow jacket that the Gillet Jaunes street protesters in France couldn’t tell apart from their own, except that the Balenciaga version costs $3750. Prada introduced “war core” wear back in 2018 which included padded jackets with multiple pockets just in case you needed to be fully prepared for a riot. That’s the point. When fashion designers start showing you what to wear to the riots, and you know that the economic conditions might give rise to riots, then it’s time to sit up and take note. Within 24 months of those designers drawing their images of the future, riots and protests started breaking out all over the world.
Today, “war core” has hardened into chain mail and metal breastplates. Frances Sola-Santiago writes in Refinery 29 that women are armoring up with heavy metal as if going into a medieval battle (open that link to see what I mean). Cardi B, Kanye (now known as just Ye), and others are showing us that solid gold, metal-plated and studded-spiked full face masks are a new rage. Check out Ye’s facemask collection on his Insta feed.
Meanwhile, the long-standing obsession with fully transparent fabrics persists. We live in a world where people are screaming for greater transparency. This trend was captured by Elle Fanning’s Gucci dress at the recent LACMA Art + Film Gala. This brings us to a new film, The House of Gucci: A Sensational Story of Murder, Madness, Glamour, and Greed. This film shows us that shopping catalogs are now presented as feature-length films. The film is connected to Seek, an online platform that is selling the things you see in the film from makeup to handbags to dresses or, as Vogue Magazine writes, “pieces that closely reflect a show or film’s aesthetic.” It’s working. Apparently, Lyst, which also shows Gucci clothing, has seen a 173% spike in searches for the Gucci brand name.
What is the Gucci ethos? Being evil and devilishly rich gives you the right, and perhaps even the need, to wear oversized everything from ski goggles to baubles. The Federal Reserve’s money-printing inflates the size of jewelry and fashion accessories too. Money printing = bling, sequins, shiny gold lame and real fur. Notice that inflation also makes hairstyles and hats get bigger. Remember the explosion of Farah Fawcett’s hair on every magazine cover? Inflation hit in the 1970s and suddenly big floppy hats and very big hair were all the rage.
Let us not forget that COVID accelerated the step-change in how we shop. The UN’s COVID-19 and e-commerce: a Global Review points out that Digital commerce was born in the pandemic. Now that the pandemic is ending (in theory) people have brought their more casual “pajamas and sweatpants at home” approach to the workplace. No more dress down Fridays. It’s dress-down every day. In fact, it’s “stay home” and work from there permanently. Could we have seen that people were buying sweatpants and not suits and thereby anticipated the Great Resignation? Perhaps. The sales of cozy clothes was, in retrospect, an important signal about the zeitgeist of our times. By the way, that trend is already dead due to supply chain bottlenecks and boredom. Fashion moves fast. If people start buying suits again, should we take notice? Yes.
It’s not that such signals replace data and numbers. Signals are stories that help open the mind’s eye to the zeitgeist that is full of useful information about the economy and it’s likely trajectory. Try to remember that throughout history humans have deployed two principal tools for imposing order on the chaos of information. Math and stories. Numbers and narratives. It is easy for the number wonks to criticize signals and symbols from inside their complex equations. But, let’s remember how painfully and consistently wrong they’ve been too.
There are two other new fashion trends that tell us a lot about the direction of travel in the world economy – circular fashion and unbranded fashion. Consumers are tapping into provenance. They want to know who made my dress, where, when, and under what conditions. They want to know what will happen to clothes downstream after they’ve been used. The mountains of discarded fashion fabrics across the world’s rubbish dumps are apparently set to contribute as much as 25% of C02 by 2025. Chile’s Atacama Desert is where much fashion goes to die. Kenya has a 30 acre burial ground called Dandora which is overwehlmed by discarded clothing. 185,000 tons arrived in Kenya in 2019 alone. Now a satellite can easily identify exactly where the clothes are piling up. I see startups that are taking this information and using it to convert those piles into better outcomes. This is going to drive consumers to intensify their focus on circular fashion. Demands for ESG around fashion will only accelerate in an era of total transparency.
Fast fashion and cheap disposable fashion have a bad name now. This has immense consequences for retailers and retail shopping environments. The trend has reversed. In the past, before the financial crisis and COVID, buyers wanted the ever cheaper, ever lower quality fashion that China’s factories were pumping out in ever more garish patterns and colors. At the peak, the world was producing The higher the volume of fashion products, the greater the need to differentiate each item by applying denser details. Today, in an inflation era, suddenly classics and classic colors are back. People are buying black, white and navy blue again. They are leaning towards clothes that are too large and not fitted as well. The “boyfriend jacket and boyfriend jeans” exemplify the shift to cozy clothes that will remain useful over time. The trend is for longevity now, not speed.
China is being hit hard by the return to quality. China is also hitting the global fashion industry hard due to the clampdown on wealth. Labels have been migrating from outside the clothing to inside the clothing for a while now. The Cyberspace Administration of China (CAC) has issued ever more draconian directives against ostentatious displays of wealth in recent years. When that didn’t work, they began arresting the “KOL’s” or Key Opinion Leaders that include celebrities and influencers. This aggressive assault on the wealthy has completely reversed the global market for luxury goods. It used to be that every fashion and luxury label bet that China was the future. Now, the future is here, and it is Texas, not China. Today, the largest fashion and luxury goods market in the world is the US. Miami is set to become the sustainable fashion capital of the world. The global luxury goods market has just hit a new record high in 2021. Factor that into your projections for the world economy as you hit the Black Friday sales!
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As always, a unique and interesting view of what to watch. Dr Pippa always makes me think, and that's a good thing!
The signals come from both math and narratives... an important observation to remember. Thanks.