Forget the yield curve. What are strippers saying?

Some of the best economic indicators don’t come from the Federal Reserve, Jamie Dimon, or a Bloomberg terminal.

While all those sources are useful, they’re also looking at the situation from very elevated, often academic views. All the numbers they run and conclusions they reach can too often miss the exceptionally important human element.

That’s why perhaps less lofty investors have come up with other ways of monitoring the markets. Like the so-called Stripper Index.

And, yes, it’s talking about what you think it’s talking about.

As untoward as such facilities might be, the premise of the Index is surprisingly logical. Strip clubs can be quite the accurate gauge of economic activity considering how discretionary they are.

Nobody has a monthly stripper budget alongside their mortgage, utilities, electric bill, car payment, and insurance. At least I really hope they don’t.

It’s only if they’re getting bonuses, their portfolios are rising, and they’re feeling good about their finances that they’re willing to pay for “entertainment.” When that all changes, so do their visits to places like strip clubs.

If they don’t stop going altogether, they stop going as frequently and leaving larger tips. That’s why strippers can realize the economy is slowing down before the Fed gets a clue.

For the record, this really just boils down to common sense. I did no boots-on-the-ground research to realize that it works and why it works. It’s all about following the discretionary dollar and where it’s being spent…

If it’s being spent at all.

I’m honestly not sure exactly when the Stripper Index was invented. I only heard about it recently. But I do know it can be credited to prominent attorney Edward Hayes.

He’s actually responsible for both the HESI (High-End Stripper Index) and HEGI (High-End Girlfriend Index) as tongue-in-cheek economic evaluations. In which case, blame him for the resulting offense.

I’m just reporting on it.

And it is worth reporting on. You don’t have to participate in a vice to recognize the reality that Hayes shared in September 2008 during an interview with the New York Observer. By his observation – firsthand or secondhand, I can’t say – high-end Manhattan strippers were losing noticeable business.

That was literally right before Lehman Brothers collapsed and the larger financial, housing, and stock markets all fell to pieces.

A 2024 Business Review at Berkeley article went further down this line of reasoning for the Global Financial Crisis. It reviewed research of seven major U.S. cities between 2003 and 2007, specifically considering their illegal sex economies.

Five of which saw estimated declines in that time period.

While that doesn’t prove these industries predicted the downfall of the world’s financial structure – correlation, after all, is not causation – it does get my attention since I remember very well how 2007 felt.

Even while I continued to build with abandon into the housing boom on the commercial real estate (CRE) side… I do recall little negative details that I now recognize for the warnings signs they were.

A lender here grew more cautious.

A buyer there backed out.

First this deal fell through.

Then that development got postponed.

As with the Stripper Index, street-level building behavior changed slowly leading up to the crash. But it did change nonetheless.

Now, speaking of the housing market crash, times have changed since 2008. “Entertainment” just isn’t the same as it used to be, with online platforms like OnlyFans cutting significantly into in-person experiences.

For all I know, the Stripper Index might be obsolete by now. Or at least in need of significant modification.

Regardless, there are other – more moral – ways of watching the signs. They’re everywhere, really.

You can pay attention to restaurant traffic, casino visits, hotel bookings, RV rentals, and boat purchases. The same goes for home renovations, luxury goods, vacations, and credit card statistics.

They’re all part and parcel of the Consumer Canary Index, named after coal mining habits back in the day. Workers would carry canaries down with them into the shafts since these birds can sense toxic gases before they register on human senses.

If the birds took off, miners knew they should hightail it out of there, too.

Now, none of the indicators I’ve mentioned should be taken alone. Sometimes a canary just wants to fly, and sometimes a sector comes under pressure in ways that don’t affect the rest of the economy.

However, when enough economic birds begin fluttering as you’re trying to tunnel through to profits… it’s probably time to make your way to the exit as well.

Being a real estate guy, I personally gravitate toward real estate-related indicators. So Angi’s List’s recently released “2026 State of Home Spending Pulse” caught my attention.

It describes homeowners as “scaling back, not stepping away” from hiring home improvement professionals, with:

That right there is interesting. Homeowners still seem to have enough money to pay for broken air conditioning systems and leaking roofs… but not kitchen or bathroom upgrades.

The necessities they’ll pay for; the luxuries can apparently wait.

It’s also interesting how a whopping 92% of those surveyed said the projects they paid for were either at budget or above, with 43% in that latter category. And when Angi asked what would make everyone more likely to book contractors in general:

That’s not the response of consumers who are broke. It’s what people say when they’re budgeting.

The same can be said for the 66% of surveyed homeowners who plan to make major home investments in the next five years. While 56% plan to begin or continue a project (not necessarily a big one, but a project nonetheless) in the next three months.

They’re not saying no; they’re just saying wait.

We can see this in Walmart (WMT) as well, an excellent indicator since so many American consumers shop there. It just reported its slowest quarterly comparable U.S. sales growth in six years. That calculation rose, mind you, but only by 2.6% – and that despite Walmart’s efforts to slash prices on thousands of products.

Admittedly, affluent consumers – those who essentially don’t shop at Walmart – appear to be doing just fine still. So maybe the High-End Stripper Index is rolling in the cash as well.

I don’t know since I don’t frequent such businesses. But what I am seeing is that American consumers aren’t dead… only thinking much more carefully about their spending choices.

This could be pre-recession behavior. Or it could just be cautionary considering the more turbulent times we’re in.

Investors shouldn’t automatically equate one with the other. They should just be aware that one could lead to the other.

The bottom line is you should always protect your principle at all costs. But if you’re not in the habit of doing so as a general rule, please follow the economic signs and start taking that precaution now.

Because risks are rising.

They might subside in the next few months. Or they might not. And, frankly, it’s okay to not know – just as long as you’re properly prepared one way or the other.

This is why I always stress the importance of:

Because too often, we get so caught up in the good times that we don’t realize when the bad times are creeping in. So why not live by the constant recognition that nothing lasts forever?

That’s what helps you sleep well at night (SWAN) no matter what economic conditions come along.

I’ve seen the results of doing otherwise. And they’re not pretty at all.

Happy SWAN investing,

Brad Thomas
Editor, The Wide Moat Daily