Commodity Management Blog

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Michael SchwartzI was listening to NPR (National Public Radio) Marketplace on the drive home from work last night.  All of sudden, I hear them talking about the Men’s Underwear Index (MUI) and the possible good economic news.  Apparently the MUI is up 5.2% – they didn’t define the 5.2% – 3rd quarter over 2nd quarter 2011, 3rd quarter 2011 over 3rd quarter 2010, etc. – but whatever, it’s still up 5.2%.

I have to admit that I’ve never heard of the Men’s Underwear Index.  I did a quick search today and the premise is that men’s underwear sales are stable during normal economic times.  But in harder times, men defer purchasing underwear.  And as wives and girlfriends can attest, men can defer for a long, long time.  The MUI is therefore considered to be a good indicator of turns in the economy.

Former Federal Reserve Chairman, Alan Greenspan, is the person most cited for giving the credibility to the index.  Mr. Greenspan said in an interview many years ago prior to becoming the Fed Chairman (paraphrasing), “If you think about all the garments in the household, the garment that is most private is the male underpants because nobody sees it except people like in the locker room and who cares. Your children need clothes. Your wife needs clothes. They have to change. The children grow. You need clothes on the outside…If you look at the sales of male underpants, it’s just been much a flat line, hardly ever changes. But on those few occasions where it dips, that means that men are so pinched that they are deciding not to replace underpants. It is almost always a prescient predictor of trouble.”

So maybe a rise in the MUI is an indicator that the economy is improving.  In either case, the discussion brought a smile to my face on a boring drive home.