Executive Cotton Update: March 2021

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U.S. Macroeconomic Indicators & the Cotton Supply Chain

Macroeconomic Overview

The U.S. Senate narrowly approved a third set of stimulus measures. This package features another round of direct payments, an extension of supplemental unemployment payments, support for state and local governments, and assistance for low-income children. The package will still need to pass in the House of Representatives, but it is expected that that could happen this week (week of March 8th).

Direct payments under the second round of stimulus were made in December and January. This corresponded with a surge in COVID cases and a wave of restrictions on consumer activity. The combination of increased income and decreased spending resulted in another rise in the savings rate. In January, the savings rate reached 20.5%. This is nearly triple the values near 7.5% that were common before COVID-19. Since the onset of the pandemic, the savings rate has been above 10% every month. Accumulated savings may serve as a source of strength for U.S. economic growth as the country makes further progress against the health crisis and as pent-up demand is released.

The savings rate is one piece of economic data that supports optimism about U.S. economic growth in 2021. Private forecasters have suggested that the U.S. economy could grow 7.0% this year. This is well above the 5.1% estimate released by the International Monetary Fund (IMF) in late January. Maintenance of low-interest rates and easy money policies are also expected to help growth. The COVID-driven recession is unique. Other recessions are commonly a result of a crisis in a given sector of the financial world, and the specific financial weakness that triggers recessions can impede recovery. For the current recession, there is no underlying financial problem to serve as a headwind. The series of vaccines that have been approved and injected over the past several months promise to help, if not resolve, the health problem that caused the current recession.


In February, the U.S. economy was estimated to have added +379,000 jobs. Revisions to previous months lowered the figure for December (-79,000 to -306,000) but lifted the estimate for January (+117,000 to +166,000). The net change in jobs since the pandemic hit the U.S. in March is -9.5 million. For context, the current size of the U.S. labor force is 160.2 million.

A drag on the labor market is the persistently high number of job losses. After spiking to levels near seven million for several weeks in late March and April of 2020, readings for initial claims for unemployment insurance have come down. Nonetheless, values have remained above 700,000 each week since the pandemic. During the last recession (global financial crisis of 2008-09), the worst figures for initial claims were around 650,000.

In February, the unemployment rate declined slightly, from 6.3% to 6.2%. The high level of weekly job losses may be linked to the decline in the labor force participation rate (ratio of those wanting to work over working-age population). Since the pandemic, the labor force participation rate dropped about two percentage points. This represents about four million people who are no longer interested in working. If the recovery cannot bring those people back into the labor market, it can reduce economic growth over the longer-term.

Consumer Confidence & Spending

The Conference Board’s Index of Consumer Confidence increased slightly in February, rising from 88.9 to 91.3. One year ago (February 2020 was the month before COVID-19 hit the U.S.), the value was 132.6. The long-term average is near 93.

Overall consumer spending rose +2.0% month-over-month in January (latest month with available data). Year-over-year, overall spending was down -1.9%. Overall spending has been negative year-over-year for every month since the pandemic.

Spending on apparel was up +8.0% month-over-month in January. Year-over-year, apparel spending was +3.4% higher. This represents the third month that spending on clothing has been higher year-over-year since the pandemic (September +6.5%, October +2.8%, January +3.4%). There were months with year-over-year decreases (November -0.4% and December -5.1%) mixed within those months of growth. These contractions coincided with the surge in COVID cases late in the year.

Consumer Prices & Import Data

Retail prices for apparel increased for the third consecutive month and were +2.5% higher in January. Despite the string of monthly increases, prices remained lower year-over-year and were down -2.7%.

Before the pandemic, the average import cost per square-meter-equivalent (SME) of cotton-dominant apparel was near $3.45/SME. With the pandemic, values fell to $3.00/SME (-13%) but appear to be stabilizing. Since November, landed unit values have been between $3.00/SME and $3.04/SME (seasonally-adjusted).

View the full report and charts.