Labubu Is the Economic Indicator You Didn’t See Coming
- Jun 12, 2025
- 4 min read
In an age of rising inflation, economic slowdowns, and growing global anxiety, an unlikely character has captured the emotional and financial attention of millions: Labubu, a quirky, rabbit-eared figurine from Chinese toy giant Pop Mart.
While Labubu may appear to be just another internet craze, the doll’s breakout success reveals something deeper. It isn’t just about toys, fandom, or cuteness. Labubu represents a new form of emotional spending rooted in a classic economic theory: the lipstick effect.
From Book Character to Global Icon: The Rise of Labubu
Labubu was born from a 2015 picture book series, The Monsters, by Hong Kong artist Kasing Lung. But it wasn't until Pop Mart licensed the character and launched it as part of its blind box collectable series in 2019 that Labubu truly exploded in popularity.
The toy’s design, mischievous eyes, jagged teeth, and floppy bunny ears struck a chord with Gen Z consumers looking for emotional connection and ironic self-expression. But what sent Labubu into the stratosphere was Pop Mart’s blind box model, where buyers don’t know which version of the figurine they’ll receive. This introduced elements of scarcity, surprise, and status, mirroring luxury fashion drops and sneaker culture.
As demand surged, Labubu figures began appearing on the arms of celebrities like Lisa from Blackpink and Rihanna, and prices for rare editions skyrocketed, sometimes reselling for over $150,000. In 2024 alone, Pop Mart generated $1.8 billion in revenue, with Labubu accounting for over $400 million of that figure. The company’s net profit jumped 188%, and its stock soared 350% in one year.
But why is a designer toy seeing such explosive growth in the middle of global economic turbulence?
Understanding the Lipstick Effect
The lipstick effect is a term used to describe a curious consumer behaviour: when faced with economic hardship, people don’t stop spending, they simply downsize their indulgences.
Coined by Estée Lauder’s former chairman Leonard Lauder in the early 2000s, the term gained traction when lipstick sales rose during the 2001 dot-com recession, and again during the 2008 financial crisis. The reasoning? When big luxuries like vacations or designer bags become too expensive, people still want to feel good, so they reach for small luxuries like lipstick, coffee, or now, designer toys.
This shift isn’t about necessity; it’s about emotional survival. And Labubu, while priced higher than a lipstick (₹2,000–₹3,000), fits that micro-luxury bracket that brings joy without guilt.
Labubu: The Lipstick of the TikTok Generation
Labubu has become a modern emblem of recession-era indulgence, especially for Gen Z and Millennials. Here's how:
1. Emotionally Charged, Financially Justified
Labubu is cute, collectable, and compact, offering emotional satisfaction at a price consumers can still justify amid rising living costs.
2. Blind Boxes = Affordable Thrills
The mystery behind each purchase adds an element of surprise, mimicking the dopamine hit of gambling or unboxing luxury items.
3. Positional Good in a Shrinking Economy
Labubu isn’t a necessity; it’s a status symbol. Scarce editions, online forums, and resale markets give it a social capital similar to limited-edition sneakers or cult handbags.
Historical Echoes: When Lipsticks Spoke Louder than Stocks
Labubu is not the first small luxury to signal big trouble. Historically, the lipstick effect has shown up in telling ways:
Year | Event | Micro-Luxury Trend |
2001 | Dot-Com Bust | Lipstick sales soared, especially at Estée Lauder |
2008 | Global Financial Crisis | Premium makeup and designer perfume sales remained resilient |
2020 | COVID-19 Lockdowns | Skincare, candles, and luxury teas boomed as emotional crutches |
2024–25 | Global slowdown | Labubu and Pop Mart collectables explode in sales |
Each time, small indulgences surged ahead of or during broader economic contractions. The pattern? Emotional escapism through affordable self-rewards.
Global Expansion Amid Local Slowdowns
What makes Labubu’s rise even more remarkable is when and where it’s happening:
Pop Mart is expanding into North America and Europe at a time when these economies face recession threats.
Labubu sales are surging while other consumer sectors luxury fashion, electronics, and autos, see softening demand.
Viral videos on TikTok and Instagram show fans queuing for hours and opening blind boxes with delight, despite inflation and falling real wages in many countries.
It’s the lipstick effect, gamified, globalised, and digitised.
Labubu as a Recession Indicator
Labubu’s explosive success may reflect not just trend cycles, but also deep economic signals:
🔹 Substitution of Luxury
Labubu provides a luxury-like experience without the cost of actual high fashion or tech. Consumers “treat themselves” in lean times via these more affordable options.
🔹 Emotional Spending Replacing Rational Spending
In uncertainty, logic gives way to coping mechanisms. Consumers don’t just seek function—they seek comfort, community, and control.
🔹 Inflation-Tolerant Behaviour
As essentials become costlier, people pivot their discretionary budgets toward smaller, joyful splurges. This behavioural pivot has analysts and economists paying attention. What people are buying and how they’re buying it often predicts broader market sentiment better than macroeconomic models alone.
Not Just a Toy: The Bigger Takeaway
Labubu may have started as a niche collectable, but today it serves as:
A micro-luxury item for emotionally-driven spending
A global status symbol for the hyper-online generation
A consumer behaviour case study for analysts watching for early recession signals
It’s also a warning bell: when consumers start shifting en masse to smaller luxuries, it often means they’re bracing for economic impact.
Conclusion: Labubu Is the New Lipstick
Much like lipsticks in 2001 or perfumes in 2008, Labubu offers comfort, community, and cachet when wallets tighten and futures feel uncertain.
For economists, Labubu is a behavioural data point. For investors, it's a sentiment signal. For the rest of us? It’s a small, strange plushie with the power to reveal a lot about how we spend, why we spend, and what we’re truly feeling.
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