The lipstick effect was theorized first by economics and sociology professor Juliet Schor in her 1998 book The Overspent American. Investopedia explains that the lipstick effect occurs when consumers shell out money on small indulgences during economic downturns, or when they personally have little cash. Cash-strapped consumers want to treat themselves to little things that help them forget their financial problems.

Sales of small luxury items (that are affordable) normally go higher in such situations due to the Lipstick Effect. New data from global market tracking firm NPD Group shows that sales of lipstick and other lip makeup jumped 48% in first-quarter 2022 over the previous year. The jump was quite visible as compared with other beauty products.

With rising inflation and rising rates, severe economic downturns are predicted in 2023. Against this backdrop, we expect some business areas and their related investments to gain further.

AdvisorShares Restaurant ETF (EATZ Quick QuoteEATZ - Free Report)

As people have reduced savings, they are less likely to afford long-distance trips. However, they’ll frequently opt for dining in fast casual restaurants, according to their budget.

EATZ is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenues from the restaurant business.

Invesco Dynamic Media ETF

Peoples’ interest for movies should also go up as go-to non-pricey form of entertainment.

The underlying Dynamic Media Intellidex Index comprises stocks of 30 U.S. media companies. These are companies that are principally engaged in the development, production, sale & distribution of goods or services used in the media industry. These companies may include advertising, marketing & public relations companies; companies that own, operate, or broadcast free or pay television, radio. The fund has exposure to Netflix, Meta, Pinterest, Fox, Walt Disney, etc.

Global X Video Games & Esports ETF (HERO Quick QuoteHERO - Free Report)

The underlying Solactive Video Games & Esports Index seeks to provide exposure to companies positioned to benefit from increased consumption related to video games & esports, including those whose principal business is in video game development/publishing, video game & esports content distribution & streaming, operating/owning esports leagues/teams & producing video game/esports hardware.

The segment gained a lot amid coronavirus-induced lockdowns as people had less options to spend time and entertain themselves. With economic downturns doing rounds, this segment again may traction.

Global X Funds Global X Health

The underlying Indxx Global Health & Wellness Thematic Index tracks the performance of companies listed in developed markets that provide products and services aimed at promoting physical wellness through active and healthy lifestyles.

With virus fears still doing rounds and growing consciousness toward wellness, such investment options should do good.