Executive Cotton Update: February 2021

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U.S. Macroeconomic Indicators & the Cotton Supply Chain

Macroeconomic Overview

The U.S. economy is estimated to have grown at a 4.0% annualized rate in the fourth quarter. This followed record growth in the third quarter (33.4%) and record contraction in the second quarter (-31.4%). As a highly aggregated number, such volatility in GDP is unprecedented. Excluding the third quarter, the rate of growth in the fourth quarter ranks as the strongest since 2014.

Annually, U.S. GDP was -3.5% lower in 2020. Year-over-year, GDP was -2.5% lower in the fourth quarter (was +0.3% in Q1, -9.0% in Q2, -2.8 in Q3). A recent report from the Congressional Budget Office predicted that economic activity will return to pre-pandemic levels by the middle of 2021. COVID and its emerging mutations remain a threat, but daily case rates have been declining and vaccines are being distributed.

U.S. consumer spending weakened with the surge in COVID cases in November and December. Year-over-year, overall spending has been negative every month since March. In November and December, overall spending declined successively month-over-month (-0.7% in November and another -0.6% lower in December). These government figures align with reports that holiday sales whithered as the season progressed. If progress against the pandemic improves as expected with vaccines, savings accumulated from the combination of lower spending and additional income from stimulus may contribute to spending growth in 2021.

The International Monetary Fund (IMF) recently released updated estimates and forecasts for GDP growth around the world. Globally, GDP is estimated to have contracted -3.5% in 2020. Due to stronger than expected activity in the second half of the year, this is nearly a full percentage point better than the figure released in October (-4.4%). For 2021, the current projection is that the world’s economy will grow +5.5%. For 2022, the projection is +4.2%. If realized, each of these years would represent the highest growth rates since the recovery that followed the financial crisis (+5.4% in 2010 and +4.3% in 2011).

China was among the few major economies to enjoy GDP growth in 2020 (+2.3%) and is expected to experience one of the strongest rates of growth in 2021 (+8.3%). The IMF estimates that U.S. GDP contracted -3.4% in 2020, but forecasts expansion of +5.1% in 2021. For the Euro Area, the IMF estimated a contraction of -7.2% in 2020. In 2021, the Euro Area is forecast to grow +4.2%.


In January, the U.S. economy was estimated to have added +49,000 jobs. Revisions to previous months lowered figures for November (-72,000 to +264,000) and December (-87,000 to -227,000). The net change in jobs since the pandemic hit the U.S. in March is -9.9 million.

The unemployment rate fell from 6.7% to 6.3% from December to January. With marginal job gains last month, the decrease in the unemployment rate was driven by a reduction in the labor force. In January, the labor force was estimated to have decreased by about 400,000 people.

Consumer Confidence & Spending

The Conference Board’s Index of Consumer Confidence increased slightly in January, rising from 87.1 to 89.3. One year ago, the value was 130.4. The long-term average is near 93.

Overall consumer spending was down -0.6% month-over-month in December (latest month with available data). Year-over-year, overall spending was down -3.3%. This represents the largest year-over-year decline since July.

Spending on apparel was down -3.8% month-over-month in December and was down -5.2% year-over-year. Unlike overall spending, there have been months during the pandemic when clothing spending was higher year-over-year (+6.5% in September and +3.3% in October).

Consumer Prices & Import Data

Consumer retail prices for apparel increased +1.7% in December and may have been a factor slowing consumer spending on clothing that month. Year-over-year, prices remained lower and were down -4.6%.

Annual import data just became available. In 2020, the square-meter equivalence of U.S. cotton-dominant apparel imports was down 16.8% year-over-year. This was roughly even with the 17.0% decline in apparel imports of all fibers. In terms of weight volume, imports of all fibers were down 18.6% year-over-year and cotton imports were down 17.8%.

These annual declines mask steep decreases in certain months. Between March and June, the weight of apparel shipments of all-fiber content was down more than 50% year-over-year. More recently, there has been growth year-over-year (+6% in October and +10% in November for both cotton and all-fiber content). In the most recent data (December), shipment weight was nearly even with year-ago levels for cotton apparel but was down -4.2% for all fibers.

View the full report and charts.