When the recession hit, pharmacist Joelle Blasig made a trade-off. She would cut back on eating out but wouldn't give up her $65 hair treatments at her favorite salon at the Mall of America in Bloomington, Minn.
"I started going gray at 16 and … this is something I'd rather spend my money on than going to eat out," said Ms. Blasig, of Eagan, Minn., as stylist Sandra Bethke dabbed Aveda Spicy Walnut hair dye onto her roots.
Stories like hers make up the pillars that support the $50 billion U.S. beauty industry, which is once again growing after some difficult years.
Today, Aveda stores and salons, Regis Salons, and hundreds of other beauty firms report stronger-than-expected sales, despite three years of economic turmoil.
The Professional Beauty Association says the beauty retail industry is on schedule to reach $59 billion in 2012 (the association wouldn't share current-year data). That's up from $43 billion in 2006, the last full year before the recession hit.
Economists call it "the lipstick effect." The phenomenon occurred throughout the Great Depression of the 1930s and during every recession since. Financially hobbled shoppers may not buy cars or diamonds, but they still indulge in small guilty pleasures -- lotions, makeup, hair dyes, gels, colognes, and manicures.
During the downturn and lackluster recovery, budget-conscious customers like Ms. Blasig traded down.
They bought smaller, cheaper products, hit salons less often, or gave up movies and restaurants in order to stick with beloved beauty brands and habits.
As a result, beauty companies are recovering quickly from the downturn.