Some may question how two seemingly different subjects are even related in the first place, especially with the fact that the hemline index originated nearly 100 years ago. There is, however, compelling evidence from both sides of the argument.
Fashion is said to reflect the temper of the times. During periods when the economy is doing well, hemlines become shorter to reflect the confidence and thriving times of the decade. On the contrary, hemlines drop whenever the economy is underperforming, matching the sombre mood. Like many other industries, fashion is closely linked to the economic status of a country, and is shaped by economic changes. If the economy is stable, the fashion industry will invest more in manufacturing and designing while creating new trends - of which the more frivolous ones (such as skirts of extremely short/long length) tend to dominate.
Multiple research studies have proved an observable correlation between economy and hemline sizes; A study conducted by two researchers Marjolein van Baardwijk and Philip Hans Franses of the Erasmus School of Economics found that the economic cycle led/leads hemline length by about three years. A prevalent misunderstanding is that hemlines rise/drop and the economy follows when in reality it is the economy that predicts hemlines. Hence why some modern periods such as the recession of 2008 did not immediately stop the trend of shorter skirts. Another 2016 study, this time conducted by Hao Chen, YingHong Dong, and KaiSheng Lai centring around the Chinese economy and fashion trends also reported similar findings. Rather than collect data from fashion magazines, they used the search data of short skirts on the shopping website Taobao. This was compared against the stock market closing price of the Shanghai Composite index over a period of eight months. It was verified that rising stock markets did lead to an increase in purchases of short skirts, linking a better stock market performance with shorter hemlines.
On the other hand, the hemline index has also been proven to be not as relevant as it was back in the 1920s. The main reason for this is the change the fashion industry has gone through in the past hundred years. Designers no longer set standard hemlines anymore - and most importantly - have a lot less impact on fashion than they did previously. Trends come and go with an increased velocity, and tend to have shorter lifespans than economic cycles. It is becoming increasingly difficult to identify the time, origin and events which give birth to new fashion trends. With individuality dominating and the sheer number of different fashion styles and sub cultures present, consumers have even more choice than ever when it comes to their skirt lengths. Nobody is ever wearing just one specific hemline, therefore it is impossible to compare the skirt lengths people are wearing accurately against the economy.
In fact, the economist who is credited with creating the theory did not even link the economy to hemlines himself. He originally wrote about the growth of the hosiery industry that came during the 1920s and how women were investing in nicer hosiery as skirts grew shorter. The news picked up on this and distorted it into the theory we know today.
The hemline index has been identified as a spurious correlation, in which two unrelated variables (in this case the economy and fashion) appear to be related but are not.
Correlation =/= causation. This misleading correlation is instead caused by another non-apparent factor, in this case, factors such as politics, pandemic outbreaks and social movements are ones affecting which aesthetics consumers respond to.