The basic premise of the hemline index is that it matches the mood of the economy. When the economy is on the rise and people have more money to spend, hemlines get shorter as people enjoy themselves. On the other hand, when the economy is stagnant, and people don't have spare money, hemlines are longer to reflect the more somber mood. 

It may sound like a coincidence, but there is quite a lot of evidence that has led people to link hemlines and the economy together. For example, during the early to mid-roaring 1920s, hemlines got scandalously shorter for the first time in history when compared to the fashion of the 1910s, particularly during World War I. When the Great Depression occurred in the late 1920s and 1930s, longer hemlines were more in fashion — no knees on display. Longer hemlines took center stage again in the 1940s during wartime, whereas miniskirts became popular in the 1960s when the economy had recovered in a lot of the world.