Consumer prices rose 0.1% in March from the prior month, a smaller increase than economists predicted. This is a positive sign that prices are cooling across the U.S., but it’s too soon to know if prices will drop enough to satisfy the Federal Reserve. Many investors and economists are bracing for a recession.

The traditional definition of a recession is two consecutive quarters of negative GDP growth. But there are some other unconventional indicators that can give some clues about the health of the economy. Yahoo Finance’s Seana Smith and Dave Briggs break down three unique measures of recession.

Key Video Moments

00:00:04 March CPI data

00:00:21 Definition of recession

00:00:37 Cardboard box indicator

00:01:42 Champagne index

00:03:28 Lipstick index

Video Transcript

SEANA SMITH: Today we got a measure, a key measure on inflation, the consumer price index. Well, in March, prices were up a tenth of a percent from the prior month and up 5% from a year ago. But it's still too soon to know if prices are going to continue to drop enough to satisfy the Fed and calm some of the fears out there that the Fed will keep raising rates as many investors are bracing for a recession.

While the traditional definition of a recession is two consecutive quarters of negative GDP growth, there are some unusual indicators that can give us some clues about whether or not we're in a recession or headed for recession. First up, we've got the cardboard box indicator. The theory here is demand for cardboard is slowing.

Consumers are not buying as much stuff, hence a look at the health of the economy. Makes a lot of sense to me. Dave, what do you think?

DAVE BRIGGS: Yeah, this seems like a real-- I like to use the term no brainer. I think this seems like an absolute no brainer to me. But based on, largely speaking, Amazon, I think if you walk around, you just judge by the amount of boxes on people's front porches, which my house ranges from about five down to about a low of one.

So yeah, I think things are tightening overall in the economy and you can see that in the amount. And I'm guessing you can track the same thing with Amazon's e-commerce business, which shows us how many boxes we are using. Yeah, I think this one actually makes a lot of sense.

SEANA SMITH: This one makes a heck of a lot of sense. All right, so we've got a graphic where I think we're going to rank this. It makes sense. Number one, we've only gone through one so far,

DAVE BRIGGS: That's right.

SEANA SMITH: But we're going to rank it as one of one because we're both on the same page. Are you ranking one of one, too?

DAVE BRIGGS: Yes. Well, where else are we going to rank that.

SEANA SMITH: Yes, exactly.

DAVE BRIGGS: OK. Up next, we have the champagne index. The theory here is when times are hard, people buy less champagne and maybe more cheap liquor. All right, your thoughts.

SEANA SMITH: Yes, that makes sense because people are trading down. They don't want to pay for that bottle of champagne. They know it costs a lot of money. But also not only that in trading down, champagne makes a lot of sense at a time when people are celebrating. They're happy, there's lots to celebrate.

In a time of recession, you're really shrinking your budget. You're not out there. You're not going to as many dinners. You're probably not celebrating as much maybe, so you wouldn't be buying the champagne.

DAVE BRIGGS: Do you see the skepticism on my face?

SEANA SMITH: Yeah.

DAVE BRIGGS: Yeah, I don't buy this one. I don't buy this one at all because I just think trends are, generally speaking, changing from champagne. Although I guess what bucks my theory is champagne sales hit a record $6.5 billion in 2022. But I would say we are moving--

SEANA SMITH: So you are having red?

DAVE BRIGGS: Yeah, I do my homework. We are moving away from, I feel like, champagne, now we can celebrate with a sparkling, or a glass of tequila, or whatever it may be. So I think that has more to do with preferences, and tastes, and inclinations than it does if you're spending money, you drink champagne.

I just don't drink champagne anymore. Probably did a lot more 3, 4, 5, even 10 years ago. It's probably declined linear over that time. You don't feel the same way?

SEANA SMITH: No, I think--

DAVE BRIGGS: I see people drinking less champagne today.

SEANA SMITH: Definitely. I mean, I don't love champagne. I think it has too much sugar. But people do love their champagne and I do think it is nice when you are celebrating, when you're out there, when you want to spend a little bit more to have a glass of champagne. So this one does make a little bit of sense to me.

DAVE BRIGGS: Does it make sense that it had an all time record in sales in 2022--

SEANA SMITH: No, that was surprising.

DAVE BRIGGS: --if it's an indicator? OK.

SEANA SMITH: Yeah.

DAVE BRIGGS: All right.

SEANA SMITH: I fee like we agree on that one.

DAVE BRIGGS: Fair enough. All right, so the last one, the lipstick index. The roots of this theory come from a relative of makeup giant Estee Lauder.

According to "Business Insider," Leonard Lauder observed that in 2001 when there was a recession, lipstick sales were rising. So the theory is when the economy is worse off, lipstick sales go up. Are you in, are you out on the lipstick indicator?

SEANA SMITH: I see. What they're saying, this one actually took me by surprise. It took me a while to process this. But I think if you take a step back, this is one thing that people are categorizing as a staple.

And I mean this is clear just even from the sales that we've seen over the last couple of quarters. People keep spending on beauty products. They keep spending on makeup.

That's not one of the areas where at least up until now, they've really been trimming their budget, really been pulling back on that spending. So that would point to the fact that, yes, then the lipstick index does make sense. People are going to spend more maybe on those necessities, on something like a lipstick at a time when maybe they're spending less out front.

DAVE BRIGGS: Yeah, the Ulta stock would tell you that one is pretty spot on. I think it's more recession proof than anything else. But I think it's more for the ladies. My makeup usage tends to be pretty linear based on television, so I'd have to lean on your expertise in this.

SEANA SMITH: Yeah, I think it makes sense. All right, so let's write them, OK? The cardboard box indicator--

DAVE BRIGGS: Number one.

SEANA SMITH: --the champagne index--

DAVE BRIGGS: Oh, sorry.

SEANA SMITH: --and the lipstick. So your cardboard box number one, right?

DAVE BRIGGS: No question.

SEANA SMITH: Champagne index number two, lipstick index number three. I'm good to settle with that.

DAVE BRIGGS: OK, I would flip two and three, but I wouldn't have a major disagreement with that list. I just might flip two and three. I think we definitely agree cardboard box number one.

SEANA SMITH: Cardboard box is definitely the number one. That one makes the most sense. You're shopping less in a recession.