What Is the Men's Underwear Index?

Men’s Underwear Index is an unconventional economic indicator, long favored by former Fed Chairman Alan Greenspan, which purports to measure how well the economy is doing based on the sales of men’s underwear. This measure suggests that declines in the sales of men’s underwear indicate a poor overall state of the economy, while upswings in underwear sales predict an improving economy.

Key Takeaways The men's underwear index is an informal measure of the overall economy, and which was once favored by Fed chairman Alan Greenspan.

The theory goes that if underwear sales are rising, the economy must be improving; and vice-versa.

This is just one of several unconventional economic indicators that combine economic and folk theory in making predictions.

Understanding the Men's Underwear Index

Men’s Underwear Index is an economic indicator popularized by former Fed Chairman Alan Greenspan, which suggests that the performance of an economy can be measured by looking at the sales of men’s underwear.

According to this theory, which Greenspan began promoting in the 1970s, an economy performing poorly will show decreasing sales in men’s underwear, while an improving economy will show an increase in underwear sales. The foundational assumption behind this theory is that men tend to view underwear as a necessity instead of a luxury item, meaning that product sales will remain steady, except during severe economic downturns.

Critics of this theory suggest that it may be inaccurate for several reasons, including the frequency with which women purchase underwear for men, and an assumed tendency for men not to purchase underwear until it is threadbare regardless of the performance of the economy.

Other Unconventional Economic Indicators

The Men’s Underwear Index is just one of a host of unconventional economic indicators that have been proposed since the advent of market tracking.

Some other Unconventional Economic Indicators that have been promoted include: