Cotton Incorporated
Executive Cotton Update
U.S. Macroeconomic Indicators & the Cotton Supply Chain
October 2025
Macroeconomic Overview: Policy uncertainty continues. After negotiations around budget were unsuccessful, the U.S. Federal government began a shutdown on October 1st. Core government functions concerning security and international trade are ongoing, but many economic data releases have been delayed.
One of the first major data releases to be postponed was the Employment Situation report that includes monthly job gains, the unemployment rate, and wage growth. International trade data, including those for apparel import volumes and prices, have also been affected by the shutdown.
A range of agricultural data, including regular monthly updates to supply and demand figures, will be delayed unless an agreement is reached before the next scheduled release date on October 9th.
Employment: An updated jobs report was scheduled to be released October 3rd, but it was postponed due to the shutdown. In the absence of government data, increased attention has been given to private sector reports. One of those comes from ADP, a service provider in the realm of human resources. Each month, ahead of government’s Employment Situation report, ADP issues data concerning private sector employment. In figures for September, the ADP numbers were weaker than expected. Findings indicated a -32,000 position contraction.
This decrease in ADP private sector employment followed government releases over the past several months that have been signaling a broader slowdown in the labor market. In the three latest months of government payroll data, the average monthly increase in jobs was +29,000. During the 2024 calendar year, the average was +168,000.
The September update is missing, and the unemployment rate has been edging slowly higher, but it has been holding at levels that are low by historical standards. It is rare for unemployment to hold below five percent. Excluding the volatility around the pandemic, the unemployment rate has been below five percent since the fourth quarter of 2016 (4.3% in August).
Lower unemployment rates are a sign of tightness in the labor market, which can support wage gains. Average increases in wages have been slowing, but they remain above the inflation rate (wages increased +3.9% year-over-year in August, the overall CPI increased +2.9%). Higher incomes can support consumer spending. But, related questions for the economy are how significant any slowdown in the labor market might be, whether wage growth will slow further, and what the implications could be for spending.
Consumer Confidence & Spending: The Conference Board Consumer Confidence Index® decreased slightly month-over-month in September (-3.6 points to 94.2). This is the lowest reading since the index dipped to 85.7 in April and represents just the second time in nearly four years that values fell outside the range between 95 and 115.
Consumer spending data were released ahead of the shutdown. In the latest available data, overall consumer spending increased +0.4% month-over-month in August. This followed a +0.4% increase in July and a +0.3% increase in June. Year-over-year, overall spending was +2.7% higher. This was stronger than the rates near +2.5% posted in May and June, but lower than the levels over three percent that were common in the second half of 2024.
Spending on garments increased +1.1% month-over-month in August. This built on strong increases that have occurred since May (+1.2% in May, +0.8% in June, +1.0 in July). Although there has been limited movement in the CPI for garments, changes in price could be a factor. The CPI is a separate data series independent of consumer spending figures. Each series has a different set of methods and are published by different government agencies (CPI data from the Bureau of Labor Statistics and consumer spending data are from the Bureau of Economic Analysis).
Year-over-year, consumer spending on apparel was reported to be up +9.0% in August. This is an exceptionally high figure, which ranks as the highest since the stimulated period after the pandemic. The longer-term average for year-over-year growth in apparel spending is near two percent.
Consumer Prices & Import Data: As measured by the CPI for apparel, average retail prices for apparel increased +0.8% month-over-month. In three of the previous four months (since April), there were month-over-month decreases. Year-over-year, the CPI for garments was flat (+0.0%). The price level represented by the CPI for clothing is currently near the highest values since the early 2000s (123.8), but it is only marginally above the values consistently posted between 2012 and 2018 (when the CPI was near 122). For comparison, the overall CPI, covering prices for all goods and services, is up +36% relative to the average between 2012-18.