In honour of International Women’s Day on March 8^th, I had the pleasure of hosting clients, colleagues, community partners and friends at the lovely El P in Peterborough for our 2^nd annual Women, Wealth and Wellbeing event. This year’s IWD theme was Give to Gain, so this event was designed to give the opportunity to learn from industry professionals, like Jacqueline Power, Head of Tax and Retirement Research at Fidelity Investment and Dr. Brenda Tapp, ND, Clinic Director of Peterborough Centre for Naturopathic Medicine. It can be hard when addressing an audience to not talk about current market events and almost impossible when we think of what the first quarter has shown us. So while we spent a little time talking about the importance of diversification in a prudent portfolio strategy, we spend more time talking about the equally important role that women play in financial markets and the economy. One of my talking points may have even gotten a little nod on BNN from Mr. Pyle.

 

In today’s economy, we rely on macroeconomic data like GDP, inflation, and interest rates and while important—they don’t always tell the full story. Increasingly, economists and investors are also paying attention to behavioral and cultural signals that reveal how people feel about the economy. Concepts like the “Lipstick Index,” the “Hemline Index,” and the rise of the “SHEconomy” may sound unconventional, but together they provide valuable insight into consumer psychology, spending patterns, and potential structural shifts shaping markets.

 

The “Lipstick Index” is one of the most well-known modern examples of this behavioral lens, popularized by Leonard Laude, chairman of Estée Lauder in the early 2000s. It suggests that during periods of economic uncertainty, consumers tend to pull back on large discretionary purchases—such as luxury handbags, travel, or high-end goods—but continue to spend on smaller, more affordable indulgences. Items like lipstick, skincare, or beauty products offer a sense of normalcy and emotional comfort without requiring a significant financial commitment.

 

At its core, this idea reflects a fundamental principle of consumer behavior: spending doesn’t disappear during downturns—it shifts. When confidence declines, people still seek enjoyment and small rewards, but they “trade down” in price. Economists often describe this through the income effect and substitution effect: as perceived wealth falls, consumers reduce spending on expensive items and substitute them with lower-cost alternatives that still deliver satisfaction. This helps explain why certain categories—particularly beauty, wellness, and affordable luxury—can remain surprisingly resilient even when broader economic conditions weaken.

 

A similar behavioral dynamic is captured in the “Hemline Index,” coined in 1920 by economist George Taylor, which links fashion trends to economic cycles. The theory suggests that in strong economic periods, hemlines tend to rise, reflecting greater confidence, optimism, and willingness to take risks. In contrast, during downturns, styles become more conservative, with longer hemlines symbolizing caution and restraint. While not a precise forecasting tool, the hemline index illustrates an important truth: consumer sentiment often shows up in subtle cultural ways, including how people dress, spend, and express themselves.

 

Both of these concepts, while more anecdotal than scientific, help to provide further insights into market dynamics which are not  always driven by numbers alone. Psychology in the context of behavioural finance plays a powerful role in shaping spending patterns, and understanding these shifts can provide an additional approach to evaluating sectors like retail, consumer goods, and luxury brands. Even when economic data appears mixed, observing where consumers are allocating their dollars can reveal underlying resilience or stress in the system and women have played a key role in understanding behavioural finance and trends.

 

While the Lipstick and Hemline Indexes focus on cyclical consumer behavior, the “SHEconomy” represents a much deeper, long-term structural transformation. It refers to the growing economic power and influence of women as earners, investors, and decision-makers. Today, women contribute an estimated $31.9 trillion annually to global GDP (Source: Bureau of Labor Statistics, Morgan Stanley GIO Data as of December 2, 2025) and are responsible for the majority of household purchasing decisions. This influence is not just significant—it is expanding.

 

Several factors are driving this shift. Women are achieving higher levels of education than ever before, increasingly delaying major life milestones like marriage and childbirth, and spending more years in the workforce building income and assets. This extended “runway” allows for greater financial independence and more time for investment compounding. Over time, these dynamics are translating into larger personal balance sheets and a stronger voice in financial decision-making.

 

In addition, a massive intergenerational wealth transfer is underway. Over the coming decades, trillions of dollars are expected to pass from older generations to younger ones, with women poised to inherit a significant share due in part to longer life expectancy. As a result, women are increasingly becoming the primary stewards of wealth—both as inheritors and as decision-makers within households.

This shift has important implications for how capital is allocated across the economy. Research suggests that women often prioritize long-term financial security, diversification, and goals-based investing. They also tend to place greater emphasis on areas such as healthcare, education, sustainability, and community impact. As their influence grows, these preferences may shape broader investment trends and create opportunities in sectors aligned with these priorities.

 

However, it is important to recognize that challenges remain. Wage gaps, career interruptions related to caregiving, and the rising cost of childcare continue to impact earning potential. Women are also currently underrepresented in high-growth fields like technology and artificial intelligence, while being overrepresented in roles more vulnerable to automation. Addressing these gaps—through education, policy, and other initiatives—will be key to fully realizing the economic potential of this wealth transfer as women shift from consumer to capital allocators.

 

The stories and data we shared at our event—and in this newsletter—underscore a central message: women’s growing economic power is transforming not just their own lives, but entire economies. As women continue to shape markets, influence investment decisions, and drive innovation, their priorities and preferences will have an ever-greater impact on the world around us. At the same time, understanding the interplay between psychology, culture, and economics can help all of us make more informed choices—whether we’re planning for the future, investing in our wellbeing, or simply treating ourselves to a small luxury in challenging times.

 

On behalf of Pyle Wealth Advisory, have a wonderful weekend! 

 

Ally Pyle 

 

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Ally Pyle is an Investment Advisor with CIBC Wood Gundy in Peterborough. The views of Ally Pyle do not necessarily reflect those of CIBC World Markets Inc.

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