With increased interest rates and inflation but falling consumer confidence, many are wondering if we are headed towards another recession. In fact, we might be in one already.
There is an unconventional indicator that might prove we are getting closer to a severe economic downturn.
- Earnest Research found out that the average number of transactions at StockX was down 20% last month.
- Even worse, the average transaction at StockX has declined every month since February compared to the same period last year. This is a significant decrease.
Not so fast, so what exactly is StockX?
Dubbed the world’s first “Stock Market of Things,” StockX has quickly become streetwear’s favorite online marketplace for buying and selling streetwear, particularly sneakers.
ln 2021, the sneaker resale market racked up $6 billion USD in annual sales. Overall, it has recorded massive interest during the pandemic.
Now, the market has reached a place where supply exceeds demand.
According to The Wall Street Journal, the secondary market for Air Jordans, Nike Dunks, and Air Force 1s is crashing down to earth.
- Some limited-edition shoes are selling for 30% less than they did several months ago.
- The average sale at GOAT, another marketplace that allows people to buy and sell limited-edition sneakers, has been declining since at least April, confirming the overall downfall in secondary sneaker prices.
What does this mean?
Whether or not a recession is on the horizon this year remains a matter of debate.
Many analysts believe it’s likely but not certain.
The National Bureau of Economic Research, for example, looks for declines in employment, industrial production, and other economic activities when assessing if a recession is taking place.
- Thus far, many signals negate the existence of recession, including labor markets, which remain strong.
- However, reduced consumer spending poses another risk to the economy because it can lead to declines in production and gross domestic product.
- Economic indicators from the U.S. suggest that the housing market is rapidly cooling off, and the manufacturing sector is already in a recession state.
The sneaker sell-off comes as investors seek to unload their products and protect their pockets, similar as is the case in a tighter economic landscape.