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Walmart may be the siren before an economic storm - at least that’s what one financial expert believes. Economist Jim Paulsen calls his theory the “Walmart Recession Signal” (WRS). When Walmart’s stock goes up and shares of luxury companies in the S&P Global Luxury Index go down, it’s a sign that the country may be headed for a recession .
“As economic activity slows and recession risk builds, retailing purchasing patterns tend to gravitate toward discounters like Walmart and away from overall or luxury retailers,” Paulsen wrote in a Substack post Monday. “Consequently, a rise in the WRS could warn of a potential recession or at least a significant economic slowdown .” And that warning is getting louder, he said. Just as it did before the Great Recession and two recessions in the 90s, the WRS is peaking.
But this time, Paulsen believes the WRS is signaling a Federal Reserve rate cut. “The WRS currently indicates that rather than raise rates any further, the Fed may soon be forced to begin cutting the funds rate again,” he wrote. An economist believes that America’s biggest brick-and-mortar retailer may hold the secret to predicting if and when the next recession might hit (Reuters) Paulsen’s Walmart-led prediction of rate cuts and recessions is one of many offbeat indicators experts turn to predict the country’s financial future.
The Lipstick Index is one such indicator, the Columbia University’s Columbia Economic Review noted in a January article . Proponents believe that as the average consumer’s wallet tightens, they skip expensive purchases like vacations and electronics and opt to splurge on reasonable things like lipstick. “Surprisingly, demand for lipstick increased right before the early 2000s recession, with people substituting buying more luxury items for buying lipstick,” the Review wrote.
Another quirky crystal ball? Men’s underwear, an indicator made popular by Federal Reserve Chairman Alan Greenspan, the Royal Bank of Canada wrote in late 2025. As consumers tumble into the first throes of a recession, they view men’s underwear as a luxury and not a necessity.
So, they pull back on their boxers-and-briefs spending, the bank said. “During the Great Recession, men’s underwear sales experienced a significant drop, reflecting a reduction in consumer spending amid financial uncertainty,” he wrote. In any case, Paulsen warns that relying on one indicator isn’t a wise strategy.
“The WRS is but a single indicator and is not necessarily the definitive voice,” he said. Meanwhile, the Federal Reserve’s data shows that, as of August 2026 - the most recent data available - there is less than a 1 percent chance that the United States is in a recession.
Source: The Independent
