U.S. Macroeconomic Indicators & the Cotton Supply Chain
Macroeconomic Overview
The International Monetary Fund (IMF) released updated economic forecasts in late October. Global GDP (inflation-adjusted) is predicted to expand 3.2% in 2025. This suggests a growth environment similar to what was experienced in 2023 and 2024 (3.3% in 2023 and a forecast of 3.2% for 2024).
U.S. economic growth continues to surprise to the upside, with forecasts rising for both 2024 and 2025 (+0.2 points to 2.8% in 2024 and +0.3 points to 2.2% in 2025). For context, U.S. real GDP grew 2.9% in 2023 and averaged 2.6% in the five years before COVID (2015-19).
Growth in the Euro Zone is expected to improve but remain sluggish. In the five years before COVID, Euro Zone GDP grew an average of 2.0% (2015-19). In 2023, growth was 0.4%. In 2024 and 2025, the IMF estimates growth to be 0.8% and 1.2%.
Despite anticipation around stimulus, Chinese growth is projected to slow. Between 2015 and 2019, Chinese GDP grew an average of 6.7%. In 2023, growth was 5.3%. In 2024 and 2025, the IMF estimates rates of 4.8% and 4.5%. In the more distant years forecast by the IMF (out to 2029), projections for China drop to 3.3%.
Global projections for 2024 and 2025 were unchanged, with IMF estimates for both years holding at 3.2%. Further into the future, growth is expected to hold near these values, with expansion in world GDP estimated to taper slightly to 3.1% by 2029.
While the overall outlook suggests stable but sluggish growth, the IMF highlighted structural challenges. These include aging populations and slower global productivity growth. The IMF suggests that risks to the outlook appear to be tilted towards the downside. Instability around the general trend of disinflation was identified as a source of uncertainty (disinflation is the process of year-over-year rates of price increases returning to normal; this is different than deflation, which is when prices decrease). Other risks the IMF highlighted included protectionist policies and geopolitical tensions.
Employment
After exceeding expectations in September, job growth fell below forecasts in October. The U.S. economy is
estimated to have added only +12,000 new jobs in October. This was the smallest monthly increase since December 2020. Hurricane Helene and strike activity were identified as factors contributing to the small number of jobs added last month. Revisions to figures for previous months were negative (-81,000 jobs to +159,000 for August and -31,000 jobs to +223,000 for September). The current twelve-month average is +181,000.
The unemployment rate was unchanged at 4.1%, a low level by historical standards. In the first quarter of 2023, the unemployment rate was as low as 3.4%. Between early 2023 and July 2024, the rate climbed as high as 4.3%.
Wages increased 4.0% year-over-year in October. After declining from a post-stimulus high of 5.9% in March 2022, the rate of wage growth appears to have formed a bottom in July 2024 (3.6%). The rate of wage growth has outpaced the rate of inflation since the first quarter of 2023.
Consumer Confidence & Spending
The Conference Board’s Index of Consumer Confidence increased 9.5 points to 108.7 in
October. This is the highest value since January 2024. Levels remain range-bound, however. The current reading falls close to the middle of the values between 95 and 115 that have generally contained the index since the middle of 2021.
Overall consumer spending increased +0.4% month-over-month in September. Year-over-year, overall consumer spending was +3.1%. This was the strongest rate of annual growth since December 2023.
Consumer spending on apparel was +0.4% higher month-over-month. Year-over-year, apparel spending was 1.7% higher. The annual growth rate in apparel spending has slowed since July, when the rate was 4.2% year-over-year.
Consumer Prices & Import Data
The CPI for garments increased 1.1% month-over-month in October. After decreasing in the second half of 2023, average retail prices for clothing resumed the upward trend that has been in place since the collapse driven by
the onset of COVID. Current price levels for clothing are higher than they were before the pandemic. The latest reading (October) is 7.6% higher than the average from 2019.
After setting records in 2022, average import prices for cotton-dominant apparel have stabilized. Recent costs per square meter equivalent (SME) have been near $3.70/SME. These values are down relative to the peak of $4.26/SME set in November 2022 but are higher than they were before the pandemic (averaged $3.45/SME in 2019).