There’s this idea in economics that when things aren’t looking so good, sales of lipstick — a relatively inexpensive treat — go up. Leonard Lauder, a former chairman at Estée Lauder, is credited with calling this “the lipstick index.”

Now, Estée Lauder is looking at a bit of a downturn: The company reported Monday that it’s seeing a slowdown in both mainland China and North America, noting on its earnings call that it was dealing with “global prestige volatility.”

Sometimes you have to step back and ask yourself the really important questions in life: “Is a $300 bottle of retinol cream better than a $200 bottle?” said Bryan Spillane, an equity research analyst with Bank of America.

That’s a question being asked by some consumers in the United States as well as China, where Spillane said demand for luxury goods has been high for the past decade.

Estée Lauder’s decline shows that may be changing.

“It really demonstrates for the first time in a long time that the prestige beauty market, and frankly, the luxury market in general, in China has slowed,” he said.

Luxury skincare and makeup did well overall when pandemic lockdowns ended. But now, with the price of everything up, consumers globally are reassessing whether they can keep spending that kind of money.

“‘I can’t afford this,’ you know, like, ‘This was great, but it’s more discretionary than it may be for other people,’” Spillane said.

Chinese consumers have good reason to pull back on luxuries these days, said Jaehee Jung, a professor of fashion and apparel studies at the University of Delaware.

“Their unemployment rate is quite high now, so many people are looking for jobs, and of course, that affects consumption,” she said.

Jung said Chinese consumers are buying some high-end items secondhand, which doesn’t work so well for makeup. So, they’re looking for domestic options.

“Maybe they can buy the same type of product at a much more reasonable price,” she said.

What does this this tell us about lipstick sales as an economic indicator?

“I do think the lipstick economy is real, right?” said Susan Scafidi, founder of the Fashion Law Institute at Fordham University.

But she said these days, people might be adjusting their idea of what a luxury lipstick is. “Maybe you’ll just buy the one at the drugstore as opposed to the one at the beauty counter in the department store,” she said.

And when people stop buying luxury brands, it creates a kind of reverse peer pressure, said Jung at the University of Delaware.

When people don’t see others buying the latest and greatest, they don’t feel the need to either.