In 1926, economist George Taylor proposed one of the quirkiest economic indicators ever conceived: the hemline index. His theory? You could predict the stock market by watching women's skirts. When the economy booms, hemlines rise. When it crashes, skirts fall to the floor.

It sounds absurd. It also sounds just plausible enough to have persisted for nearly a century.

The Roaring Twenties Connection

Taylor developed his theory during a perfect moment in fashion history. The 1920s saw both unprecedented economic prosperity and the rise of the flapper—young women in daringly short skirts that scandalized their Victorian-era parents.

Then came the 1929 crash, and hemlines dropped dramatically. The somber, floor-length fashions of the 1930s Depression seemed to validate Taylor's observation perfectly.

Does It Actually Work?

Here's where it gets interesting. Economists have repeatedly tried to prove or disprove the hemline index with actual data. The results?

1960s miniskirt era coincided with economic expansion—point for the theory
1987 stock market crash saw no corresponding fashion shift
2008 financial crisis occurred during a period of both mini and maxi skirts
2020 pandemic brought loungewear, not long gowns

A 2010 study from researchers at Erasmus University Rotterdam found that hemlines do seem to follow economic cycles—but with a three-year lag. By the time skirts reflect the economy, you've missed your trading window entirely.

Why We Want It to Be True

The hemline index survives not because it works, but because it tells a compelling story. It suggests that economics isn't just about GDP and interest rates—it's about human psychology, confidence, and how we literally present ourselves to the world.

There's something appealing about the idea that our collective mood shows up in what we wear. When times are good, the theory goes, we feel confident, optimistic, sexy. When times are bad, we retreat into modesty and practicality.

Fashion historians offer a simpler explanation: fabric costs. During economic downturns, women historically bought longer skirts because they could be altered and reused. Shorter skirts signaled you could afford to follow trends.

The Modern Problem

Today's fashion makes the hemline index essentially useless. Walk down any city street and you'll see mini skirts, midi skirts, maxi dresses, and everything in between—all at the same time. The era of a single dominant hemline ended decades ago.

Fast fashion means trends cycle through in weeks, not years. And increasingly, women dress for themselves rather than following prescribed seasonal looks.

The hemline index joins a long list of quirky economic indicators that capture our imagination but don't survive statistical scrutiny—like the Super Bowl Indicator (NFC wins predict bull markets) or the Lipstick Index (lipstick sales rise in recessions).

Still, next time the market takes a dive, you might catch yourself glancing at skirt lengths. George Taylor's nearly century-old theory has that kind of staying power—not because it's true, but because we kind of wish it were.

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