What a week to be thinking about the world and geopolitics! I’ve never seen anything like this. It’s not clear whether you, me or anyone else can stomach 3½ more years of this carry on.
Recently this column suggested that the White House would back down once the reaction to the tariffs manifested itself. And so it came to pass. But at what cost? The most significant price is a likely US recession, simply because the Trump uncertainty has scared the life out of the average American. Punters and businesses have reacted to the past few weeks of chaos by becoming much less confident about the future. Survey after survey points to a rapid downturn irrespective of Wednesday’s tariff reprieve.
If there was an economic problem, Donald Trump has made it worse.
You will hear a lot of talk this week about “liquidity” drying up. What exactly does this mean? Liquidity is a fancy word for lots of cash sloshing around. Because it is profit-making commercial banks and not rule-making central banks that create money, money is created when banks are upbeat about the future. The more upbeat the more money.
Once banks become nervous, their lending committees start refusing new loans, refinancing options and bridging finance. The cost of money goes up as the supply goes down, and indebted companies that were given the benefit of the doubt begin to look like broken promises. When confidence evaporates so too does liquidity, and things start to break.
[ David McWilliams: Use the tariff crisis to fix the Irish economyOpens in new window ]
American fears are spreading across the Atlantic. For example, in Ireland the Credit Union Consumer Sentiment Index plunged to 67.5 in March 2025 – a nine-month low and well under the long-term average of 84. The drop – the sharpest in more than two years – reflects anxiety over our economic outlook and, in Ireland’s case, the Trump tariff effect.
Globally, confidence is also fragile: an Ipsos report reveals that the Global Consumer Confidence Index has reversed back down to levels seen this time last year. Lots of people are reassessing the future. And while attention this week has focused on remote financial markets, let’s see what the picture close to home reveals.
Let’s open our eyes.
Economics is little more than the study of human behaviour. As fashion is one of the more significant outward signs of human behaviour, we can find unusual but accurate indicators in what people are wearing, what they are (or are not) buying and how popular culture is shifting. For example, in 1926, an economist named George Taylor came up with what he called The Hemline Index, referencing the hemline of skirts. He noticed that when the economy dropped so did hemlines. In good times, skirts got shorter. The Hemline Index originated in the Roaring Twenties when flapper girl short dresses were all the rage.
More recently in 2001, Leonard Lauder, one of the heirs to the Estee Lauder fortune, came up with the Lipstick Index. The economy in the US was reeling from a dotcom slump, but Lauder noticed sales of lipstick were rising, not falling; as the economy worsened lipstick sales improved. Why might this be? When worried about being able to afford big things, plenty of women were buying more of the little things. As lipstick is cheap and something you can wear and show every day, women were buying more lippy.
This type of behaviour is not new. In the 1950s, fashion houses such as Chanel, Dior, Yves Saint Laurent and Balenciaga pivoted towards a new generation of working women who wanted “affordable” luxury. They mightn’t have been able to afford a designer bag or suit, but they could buy cheaper designer goods such as perfume and cosmetics. Ahead of downturns, when people begin to feel a bit anxious about the future, the sales of “affordable luxury” items – lipstick, nail polish, perfume – increase.
Today, when inflation is still high and Trump is terrifying people, buying a home, a car or going on holiday has become prohibitive, but buying a $30 Dior lip plumper has not. Expect lip plumper sales to go up.
Old is in, new is out, and people are flocking to second-hand platforms to save money while also hoping to save the planet by cutting down on waste. Revenue at Vinted – Europe’s largest second-hand fashion app – was up by 61 per cent last year to €596 million as thrift clothes became mainstream. In the UK, eBay reported a 20 per cent year-on-year jump in second-hand fashion listings (after a tie-in with Love Island) and an astonishing 140 per cent rise in used furniture sales.
A delivery firm noted a 162 per cent spike in parcels sent between households, driven largely by second-hand goods trading hands. According to one survey, over a third of shoppers (35 per cent) plan to buy more second-hand stuff in the next five years.
Supermarkets are also a mine of economic information. Reflecting the trend towards prudence, in Ireland spending on discounted grocery items jumped 11.6 per cent last year, with promotions now making up 23.9 per cent of all supermarket sales. There is also a shift to cheaper own-brand labels. A decade ago, less than 20 per cent of the average Irish shopping basket was store-brand; today it is half the basket, often saving the shopper 30 per cent. Supermarkets have ramped up meal-deal promotions and value packs.
On social media, a recent trend has emerged called No-Buy. Frugality is going viral. #NoBuy2025 challenges are spreading on TikTok and Instagram, where people publicly undertake to buy only essentials. Google searches for “no-buy challenge” are up 40 per cent year on year. One TikTok creator’s video outlining strict “No Buy 2025” rules garnered 2.6 million views and 200,000+ likes – indicating huge interest in cutting out shopping. This influencing trend (essentially anti-consumerism) points to a pop culture embracing thriftiness, far removed from the Kardashian flashiness of some years ago.
Where second-hand shopping is increasing, fast fashion is falling. Last year, sales at online retailer Boohoo (known for cheap trendy clothes) slumped 13 per cent and its number of active customers fell 11 per cent, prompting 1,000 lay-offs. At the same time, Vinted’s sales leapt 51 per cent last year. Globally the $177 billion second-hand clothing market is forecast to nearly double by 2027, growing three times faster than the overall fashion market. Even major retailers such as H&M have begun offering “pre-loved” sections, a sign that thrift shopping has gone fully mainstream in 2025.
The economy is a highly sensitive ecological ecosystem, where everything is interrelated. Holding the whole edifice together is this ephemeral notion called confidence. Confidence is a feeling, not a fact. At the centre of the system is the highly emotional creature called the human being. We are extraordinarily susceptible to mood swings and suggestibility. When the ecosystem is disrupted by some dramatic change in the environment, such as an on-off trade war, the ramifications are felt in the remotest parts of the global economy.
Trump has done just that. He has upset the delicate balance. The system will recalibrate, but it will not be the same as it was before all this chaos. Buckle up.
