Executive Cotton Update: December 2020

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U.S. Macroeconomic Indicators & the Cotton Supply Chain

Macroeconomic Overview

The latest jobs report signaled a significant slowdown in hiring in November. Even before the latest surge in COVID cases, a deceleration in economic activity had been anticipated in late 2020 and early 2021. This was because the gains from simply reopening were already enjoyed in the second and third quarters. The second phase of the recovery, which will require repairing from financial damage, has been expected to be more challenging.

With the latest surge in COVID, certain states (including California, which is the U.S. state with the largest population and the largest economy) have reissued stay-at-home orders. The shuttering of businesses will be a headwind for economic growth. Several forecasters have indicated that the U.S. GDP could contract in early 2021.

A potential source of encouragement is that a downturn could motivate another round of fiscal stimulus. Both political parties have reported progress towards an agreement. Political analysts have suggested that a deal appears likely before the end of the year.

Another source of optimism is that multiple vaccines have proven effective. It will be several months until those vaccines are widely available, but the promise of a medical solution could support consumer confidence. Despite COVID and its many effects, the Index of Consumer Confidence has been able to hold onto levels above its long-term average (93.3 since 1970). This contrasts with readings during the financial crisis when the index collapsed to levels below 30.

With the onset of the holiday sales period, it is a time of year when consumer confidence is a focus. The National Retail Federation (NRF), a trade group representing U.S. retailers, reported that spending between Thanksgiving and Cyber Monday averaged $312 (Cyber Monday is the Monday after Thanksgiving, and it is traditionally the biggest day for online spending in the U.S.). This was down 14% year-over-year but nearly even with the level from 2018. A weight on overall spending was a decline in in-store visits. The NRF estimates foot traffic was down 37% on Black Friday (Black Friday is the day after Thanksgiving, and it is traditionally the biggest day of the year for in-store spending). Meanwhile, the number of consumers shopping online was reported to have risen 8% to 100 million (U.S. population is 331 million). Data from Adobe Analytics indicated that online spending on Cyber Monday increased by 15% year-over-year.


The U.S. economy was estimated to have added 245,000 jobs in November. This is the lowest number since the recovery in the labor market began in May. The value for November is less than one-half the figure for October and is only about one-third of the figure for September. Revisions to previous months’ estimates were mixed. The figure for September increased by 39,000 to +711,000, and the figure for October decreased from 28,000 to +610,000.

The total number of jobs lost in March and April was 22.1 million. In the months since then, job growth has totaled 12.3 million. This implies a net reduction near 10 million jobs since the onset of COVID. Beyond these job losses, there has also been a decrease in the number of people wanting to work. Last month, 400,000 people left the labor force, which was the driver of the month-over-month decrease in the unemployment rate (from 6.9% to 6.7%). Since February, the labor force has lost four million people.

Consumer Confidence & Spending

In November, the Index of Consumer Confidence suffered its largest month-over-month decline since August (-5.3 points). The current value (96.1) remains above the long-term average (93.3 since 1970) but is down more than thirty points year over year.

Overall consumer spending was 0.5% higher month-over-month in seasonally-adjusted data for October. Year-over-year, overall spending was down by -1.8%. This was the shallowest year-over-year decrease since February.

Following a strong 6.3% month-over-month increase in September, consumer spending on apparel climbed another 0.3% month-over-month in October. Year-over-year, clothing spending was positive for the second consecutive month. In September, clothing spending is estimated to have been 5.8% higher year-over-year. In October, it was 2.7% higher.

Consumer Prices & Import Data

Retail apparel prices, as measured by the CPI for garments, decreased by 1.9% month-over-month. Year-over-year, aggregate apparel prices were 6.2% lower. Average import prices for cotton-dominant apparel were decreased by 1.5% month-over-month in seasonally-adjusted data for October. Year-over-year, import prices were down 10.0%.

The U.S. began imposing supplemental tariffs on Chinese-made apparel in September 2019. Every month since then, the volume of U.S. clothing imports from all sources had been negative year-over-year. Year-over-year comparisons are being made against levels affected by tariffs. Still, the year-over-year change in the volume of clothing imports (square-meter equivalence) turned positive in October (+5.2% for apparel of all fibers, +6.2% for cotton-dominant apparel).

View the full report and charts.