What’s trending in your wardrobe might depend on the stock market’s status

As society navigates the economic uncertainties of 2024, a closer look at the past two decades reveals a fascinating interplay between fashion trends and economic cycles. From the exuberance of the early 2000s to the pragmatic shifts during recent downturns, fashion has profoundly mirrored and influenced the economic landscape.

The interplay of fashion and economy is not direct, but the relationship between the two makes one another unavoidable. “There is no sector of our economy or our interactions as human beings that is not touched by the way we dress,” Kristen Schoonmaker, an assistant professor of fashion design at Syracuse University, said. “Fashion intersects with so many issues, from gender identity and access to power to environmental concerns. It’s seductive, yet it always comes back to the economy.”

According to Süleyman Orakçıoğlu, CEO of Orka Holding, fashion’s influence extends beyond aesthetics, shaping and being shaped by economic trends. “We need to evaluate the relationship between fashion and the economy from both global and local perspectives. It’s not just economic changes but also socio-cultural shifts that heavily influence fashion,” Orakçıoğlu said. 

Economic Prosperity and Fashion Flourishes

In the early-to-mid 2000s, the U.S. economy rebounded from the dot-com bubble burst, marked by robust growth and rising consumer confidence. This optimism spilled into fashion with a resurgence of luxury and experimental styles. The housing market boom drove consumers to splurge on high-end brands and extravagant designs, while bold colors, glamorous fabrics, and designer labels dominated runways and retail stores.

“Whether logo-filled or embellished with buckles, baguette-shaped bags were considered the 2000s It trend to own,” Anna Laplaca, senior editor of Who What Wear, wrote. “Everything about 2000s fashion was defined by a more-is-more mentality: more embellishments, more layering, and showing more skin.”

The micro miniskirt became the epitome of early 2000s silhouettes. Sound familiar? The micro miniskirt made a comeback in 2022, mirroring the tech optimism of the 2000s, fueled by advancements in artificial intelligence (AI) and the launch of ChatGPT. Alongside the micro miniskirt, Juicy Couture’s rhinestone-emblazoned velour tracksuits found their way back into mainstream fashion, riding the wave of Y2K nostalgia and social media-fueled trends.

Recession Hits: A Fashionable Shift to Practicality

The global financial crisis of 2008 marked a dramatic turning point. The collapse of Lehman Brothers, a storied investment bank founded in 1844, which had grown into a major player in global finance, and the subsequent recession led to widespread financial uncertainty and high unemployment, driving fashion trends toward practicality and affordability.

During this period, budget-conscious fashion took center stage. Luxury department stores like Saks Fifth Avenue reduced retail prices by as much as 70% to liquidate inventory and boost sales, signaling a shift toward affordability even within the luxury market. The era of conspicuous consumption gave way to essentials and value for money. Fast fashion brands like H&M, Zara, and Shein – offering trendy but affordable clothing – thrived as consumers adjusted their shopping habits.

“The entire world was caught with surplus inventory. To manage this, companies had to find new solutions, leading to an enormous shift towards online and digital sales,” Orakçıoğlu said. “Firms that would have implemented their e-commerce strategies five or ten years later had to accelerate their plans within a few months to stay afloat.”

Notably, Shein, the global e-commerce platform, saw a rise in sales that paralleled moments of economic hardship. Founded in 2008 during the Great Recession, Shein’s prominence surged again during the COVID-19 pandemic. U.S. sales doubled between March and April 2020, capturing 50% of the U.S. fast fashion market by 2022. This pattern highlights how economic hardships consistently drive demand for affordable, trend-driven options.

“If there’s a drop in the stock market and the economy is struggling, I think about saving and serious times,” Schoonmaker said. “That shift often manifests in fashion – more conservative designs, less extravagance, and a push for anti-consumption. However, fast fashion would also mean more fabric.”

Recovery and Innovation Define the 2010s

As the economy recovered in the 2010s, fashion trends reflected renewed consumer confidence. The rise of e-commerce and social media transformed the industry, while direct-to-consumer models gained traction. Luxury and experimental designs reemerged, fueled by economic stability and stock market growth.

This period also marked a turning point in sustainability and ethical, safe fashion. Growing consumer awareness of environmental issues drove brands to prioritize eco-friendly practices – a trend that continues to shape the industry today.

Pandemic Aftermath: Comfort Meets Consciousness

The COVID-19 pandemic brought new challenges and further shifts in fashion trends. Supply chain disruptions and inflation concerns pushed fashion toward comfort and functionality. Loungewear became the norm as consumers prioritized practicality while staying home. At the same time, sustainability gained even greater prominence, reflecting a societal shift toward environmental responsibility.

“Developers working on AI and other groundbreaking technologies often create sudden changes in the market, just like NVIDIA (NVDA),” Sej Kim, an engineer at Goldman Sachs, said. “We tend to focus on the obvious industries, but sometimes, unexpected sectors like computer vision can become sleeper hits. These shifts run through markets and influence consumer behaviors. I imagine fashion is not an exception.”

Themes Over Time

A closer look at key years – 2003, 2007-2009, 2013, 2016, 2019, 2022, and 2024 – provided recurring themes:

Inflation and Interest Rates: Inflation and interest rate policies are recurring issues affecting economic stability and growth.

Economic Cycles: Periods of growth, downturn, and recovery drive consumer confidence and spending.

Government Intervention: Bailouts, stimulus packages, and monetary policy often play a critical role in addressing economic crises and fostering recovery.

Financial Crises and Recovery: Each of these years reflects phases of financial stability, crises (such as the Great Recession), and subsequent recovery efforts.

Market Fluctuations: Stock markets and consumer sentiment frequently align with economic conditions, government policies, global events, and fashion trends.

Sustainability: Environmental consciousness has steadily grown, particularly in times of economic stability.

Fashion Trends and the Road Ahead

As we move through 2024, the fashion industry faces ongoing economic uncertainty. Yet innovation and sustainability remain at the forefront, shaping the industry’s response to shifting consumer priorities. The interplay between economic forces and fashion trends underscores how style reflects not just personal taste but the broader social and economic context.

Fashion’s evolution reflects global priorities, from sustainability to tech-driven optimism. By examining these trends, society gained insight into how economic cycles shape what people wear and how the industry continues to adapt to change.

It is good to note, however, that a lot of moving parts come into play when discussing the economy. It is not just the fashion or markets that correlate; it’s the job markets, stocks, housing, health, and a vast range of things.