The Lipstick Effect, a term first coined by Estée Lauder chairman Leonard Lauder in 2001 after a dramatic boost in sales following the 9/11 attacks, refers to an economic phenomenon where, during national monetary downturns, consumers turn to more affordable “luxuries” such as cosmetics rather than splurging on pricier items like luxury vehicles, designer handbags, or foreign vacations.
The theory suggests that despite consumers’ money being tight, they will still look for ways to treat themselves, and these smaller indulgences provide a sense of escape and self-care without breaking the bank.
When economic uncertainty creates stress, people often seek ways to boost their mood and maintain confidence and a sense of control. In this context, purchasing beauty products, such as lipstick, provides a temporary, psychological relief from monetary stress. It’s retail therapy.
Interestingly, The Lipstick Effect extends beyond cosmetics. It reflects a larger trend in consumer behavior and marketing — when larger indulgences become out of reach, smaller luxuries offer a way to maintain a sense of normalcy, self-expression, and confidence. It provides a way for those in lower economic brackets to participate in modern trends and celebrity culture that is out of their reach.
From a local perspective, Miami, with its vibrant cultural mix and high traffic of tourists, has become synonymous with luxury brands, art, and fashion. As a city where status and appearance are closely tied to personal identity, The Lipstick Effect resonates strongly in this market. These purchases are not just about self-care — they are deeply connected to maintaining an image that aligns with the city’s glamorous and image-driven culture.
Lipsticks, perfumes, and high-end skincare products offer an affordable way to feel and look good without the need for more extravagant purchases or cosmetic surgeries. Miami’s diverse population, especially within the Latinx/Hispanic community, also plays a crucial role in the city’s beauty market.
In many Latin American cultures, beauty is a key form of self-expression, making beauty products essentials, especially during tough times. For many, these products serve as empowering acts that help maintain a sense of community with their cultural expectations when other forms of indulgence may be less accessible. Understanding these demographic shifts and preferences is crucial for economists and marketers when trying to predict recessions.
During times of economic stress and high unemployment rates, which were seen frequently both during and after the pandemic, many people face financial insecurity and cut back on major expenses. In Miami, the impact of local unemployment rates is felt across various industries, but particularly in service and hospitality sectors, where many residents work.
The idea of maintaining an image of success, confidence, and vitality is crucial in the city’s culture, and provides confidence in a quick turnaround. It presents the individual as performing better than they are
One of the interesting shifts in consumer behavior, particularly in beauty products, is the growing preference for lip gloss over traditional lipstick, especially among Gen Z. This generation has moved away from matte, bold lipsticks in favor of glossy finishes, a trend synonymous with the “clean girl aesthetic” of natural makeup.
For economists trying to track The Lipstick Effect in 2025, this change in preference is significant. While lipstick may have been the go-to indicator of small indulgences in previous generations, Gen Z’s focus on lip gloss signals that economists must continuously adapt to these evolving trends and tastes to predict future spending patterns, according to Circana and LS:N Global.
To test The Lipstick Effect in Miami-Dade County, one can compare Google Search trends for lip products and to unemployment in MDC. Although lipstick reigns supreme, Google Trends show that lip gloss and lip balm are reaching lipstick popularity among Miami-based searchers. This is due to Gen Z consumers’ preferences for lip gloss over lipstick, emulating the mid-2000s trend of lip gloss use, which is also reflected via Google Trends statistics.
Between 2006 and 2009, unemployment in Miami surged dramatically, peaking at 108.6 in 2009 due to the 2008 recession. During this period, searches for lipstick increased from 92.0 in 2006 to 351.0 in 2008, reflecting the shift toward affordable self-care during tough economic times. Similarly, lip gloss searches rose from 0.0 in 2006 to 106.0 in 2007, while lip balm searches remained at zero until 2009.
Lip gloss at the time became a popular trend due to its flashy finish, attracting attention, which many strived for to boost confidence in self-expression during financial struggles. After the crisis, as unemployment decreased from 105.5 in 2011 to 34.2 in 2019, searches for lipstick steadily increased as well, possibly due to a slow trend cycle and an increased need for personal hygiene as more people joined the workforce again, peaking at 869.0 in 2016, while lip gloss and lip balm also showed gradual growth.
The COVID-19 pandemic in 2020 caused another spike in unemployment, reaching 88.8. As per the theory, interest in beauty products. Lip gloss searches surged to 158.0 in 2020, while lipstick and lip balm remained steady at 440.0 and 81.0, respectively. As unemployment steadily decreased through 2021–2023, searches for lip balm continued to grow, reaching 148.0 in 2023 and 181.0 in 2024. Despite fluctuations in the job market, beauty products like lip products held their emotional appeal, providing a sense of comfort and normalcy for consumers.
Local sales accountant and cosmetic enthusiast, Maria Rey, comments, “It is actually a typical behavior in consumers when they experience a significant decrease in their income — substituting a luxury item for a lipstick ultimately satisfies a need for consumption without breaking the bank.”
Chloe Morales, a political science and business student at Florida International University, complements Rey’s view and explains, “During tough economic periods, people often DIY their makeup to emulate a sense of celebrity… Makeup is a luxury item and symbolic of wealth — even if luxury brands ‘up’ the price to create exclusivity, consumers will be even more motivated to purchase and satisfy their chase of status.”
In conclusion, The Lipstick Effect offers a fascinating look at how consumer behavior responds to economic challenges. It reveals that, while larger purchases may be restricted during tough economic times, smaller indulgences like cosmetics provide a boost in self-esteem without requiring a significant financial outlay. In a place like Miami, where image is a powerful part of personal identity, The Lipstick Effect becomes even more pronounced. Beauty products are more than just items — they are symbols of status and cultural identity.
Understanding this trend is important for local cosmetic businesses that can capitalize on the correlation.
You can read a more interactive version of this story on Medium.
