right here. You can listen to an audio version of the newsletter by clicking the same link. New York CNN  —  How do we know if the economy is in decline? The answer might be on our lips. Estee Lauder chairman Leonard Lauder created the lipstick index during the economic downturn following September 11, 2001. He noticed that the purchase of cosmetics, lipsticks in particular, tend to be inversely related to the economy because women replace more expensive purchases with small pick-me-ups. In fall 2001, US lipstick sales increased by 11%. And back during the Great Depression, cosmetics sales overall increased by 25%. In 2020, at the height of the Covid economic downturn, Estee Lauder’s CEO Fabrizio Freda said that the lipstick index had been replaced by a skincare item as customers donned masks and worked from home. “The lipstick index has been substituted with the moisturizing index,” said Freda. “But the concept of the index is still there.” Now we may be seeing that phenomenon rear its head once more. Sephora recently announced a record sales year and data from consumer research group Circana shows that prestige beauty growth has outpaced mass beauty sales, growing 9% and 2%, respectively in the first quarter of the year. Of course, the so-called lipstick index is a less technical — and more fun — measure of economic downturn and isn’t always entirely accurate. But as the free-spending post-pandemic party comes to an end in the US, it’s something worth exploring. Before the Bell spoke with Neela Montgomery, CEO of Overeon (a collective of premium cosmetics brands including BareMinerals, Laura Mercier, and Buxom) about the outlook for beauty in an uncertain economic climate. This interview has been edited for length and clarity. Before the Bell: We’ve been writing a lot at CNN about how Americans are beginning to rein in their spending. Consumers seem to be taking a hit right now. But data shows that more expensive prestige beauty sales are outpacing mass, lower-priced beauty sales. How do you explain that? Neela Montgomery: Beauty shifted a bit during the Covid times because it became self-care purchase orientated. I do think that’s making it more resilient to broader economic trends. As people are thinking about where to reduce spending, it’s more likely to be in fashion and very high-priced discretionary goods than beauty. What’s very interesting about beauty and one of the things I really like about the industry is that we continue to innovate, it’s fast-paced and there are new trends all the time for people to keep up with. So Bare Minerals Lip Gloss Balm is a huge new product for us…it’s like a micro-moment of pleasure that people can treat themselves to. I think that is still very appealing and seems relatively easy to access for $24. So I think that is why it’s more resilient. It’s more about the comparative nature of prices and what customers are using products for. Do you think the industry has been just resilient or have you seen a boost? I think if you look at the broader prestige market, it’s been enormously resilient across all demographics including age and income. Skincare drove a lot of that for a while and now fragrance and makeup are dominating again. The category remains way, way higher than one would expect. It’s a considered purchase, but it’s not so discretionary that it’s unobtainable. You mentioned that trends move quickly in the beauty industry, are TikTok and other social platforms driving sales and have you adjusted your products based on influencer trends?  Well, Laura Mercier is very much about a flawless face and what makes you unique makes you beautiful so we recognize that a trend like glassy skin is not for that brand. But the latte look could be, so we think about it more in terms of palette trends. For example, we’re about to launch a caviar matte lipstick, and matte lipstick has definitely made a huge comeback – it’s also super popular in Asia, which is a very high growth part of our business. So we think about overall trends and then TikTok trends specifically where they’re relevant. We can’t respond to every microtrend, we’re not in that kind of development cycle, but if it relates to our brand, how we then go to market and talk about it very much resonates on TikTok. And then the other thing I would say about TikTok that I think is fascinating is the role of these communities. Social selling has become almost 20% of our brand .com sales. That’s a really interesting and important trend because what matters these days for a brand is what people say about you to each other rather than what you say about yourself. What do you see dominating the beauty market in the second half of the year?  Clean has become a real buzzword in this industry, but this whole idea of no-tox (anti-botox), remains a really important thing… The market is bifurcating between this very authentic, real look and people who are getting more cosmetic work done. What we see is a need for more of these kinds of efficacious products for people who don’t want to go down the cosmetic procedure route or injectables route. And then we continue to see that sort of clean girl with a pop of color look. So you know, we have this sort of red lip…We continue to see that grow and expand. I think what’s fascinating is how informed people are about ingredients – whether it’s a sesame seed extract in the lip gloss, or using sea buckthorn or just being educated around some of these unique natural ingredients that have, probably not the same efficacy, but have efficacy as well compared to more more obvious things like retinol. As AI booms, Microsoft’s deal with a startup comes under federal investigation The Federal Trade Commission is investigating a recent Microsoft deal with artificial intelligence startup Inflection, according to a person familiar with the matter, as US antitrust regulators ramp up scrutiny of the red-hot AI industry. Microsoft announced in March that it had hired Inflection’s co-founders and a number of its staff to lead its Copilot program, and Inflection said its AI model would be hosted on Microsoft’s cloud platform. As part of that deal, Microsoft was said to have paid Inflection $650 million. In its announcement at the time, Microsoft described the move as merely a hiring decision, not as an acquisition. The FTC probe into Microsoft concerns whether the company’s investment in Inflection constituted an acquisition that Microsoft failed to disclose to the government, one of the people said. The investigation comes as antitrust officials at the FTC and the Justice Department are nearing a final agreement this week on how to jointly oversee AI giants such as Microsoft, Google, Nvidia, OpenAI and others, two people familiar with the matter told CNN. That agreement, which could be finalized within days, would appoint the DOJ as the lead investigator of Nvidia, while the FTC would take responsibility for investigating Microsoft and OpenAI, the people said. DOJ will likely continue its role in overseeing Google, one of the people indicated. Any investigations would focus on whether the companies have used their dominant positions in the AI industry to harm competition through abusive and illegal behavior. The agreement shows enforcers are poised for a broad crackdown on some of the most well-known players in the AI sector, said Sarah Myers West, managing director of the AI Now Institute and a former AI advisor to the FTC. “Clearance processes like this are usually a key step before advancing an investigation,” West said. “This is a clear sign they’re moving quickly here.” Microsoft declined to comment on the DOJ-FTC agreement but, in a statement, defended its partnership with Inflection. Read more from CNN’s Brian Fung here. Up next Monday: The US Department of Treasury holds auctions for 3-year notes. Tuesday: The OPEC Monthly Oil Market Report is released. Wednesday: The Federal Reserve announces its latest interest rate decision and releases a fresh set of economic projections, followed by a news conference featuring Chair Jerome Powell. Plus, the US Bureau of Labor Statistics will release May’s Consumer Price Index. Thursday: Earnings from Signet Jewelers. The US Bureau of Labor Statistics releases the Producer Price Index for May. Friday: The Federal Reserve Board submits written reports to Congress containing discussions of “the conduct of monetary policy and economic developments and prospects for the future.”