I am no finance nor economy expert so when I came across this term, I was highly amused. According to Investopedia, Men's Underwear Index is a measure of how well or bad the economy is based on sales of (you guessed it!) men's underwear. It is on the basis that men will hold off from buying new underwear if the economy is bad and vice versa.
However, critics (and myself, the layman) disagree because, lets be honest, we men don't know how to buy underwear and need to count on our moms or spouses. Besides that, we men like to wear old underwear until it is full of holes (maybe it is evolution in our thinking to make sure that sperm production is maintained) regardless of the economy.