DEFINITION of 'Men's Underwear Index'
An unconventional measure of how well the economy is doing based on sales of men's underwear. The reasoning behind this measure assumes that men view underwear as a necessity (not a luxury item), so sales of this product should be steady - except during severe economic downturns, when men will wait longer to buy new underwear. The notable decrease in underwear sales is said to reflect the poor overall state of the economy. Conversely, when underwear sales pick up, the economy is considered to be improving.
BREAKING DOWN 'Men's Underwear Index'
Former Fed Chairman Alan Greenspan subscribes to this theory, but its critics say it may not be accurate because women purchase a significant amount of underwear for men. Other critics argue that men do not buy new underwear until it's threadbare, regardless of how well the economy is doing.