October 2013 Executive Cotton Update
Macroeconomic Overview: In a political breakdown, the U.S. government ceased all non-essential services on October 1st. The shutdown may be seen as a result of the on-going political struggle between Republicans and Democrats that emerged from efforts to de-fund the 2010 health care law (Affordable Care Act) and the failure to reach a longer-term compromise involving spending, taxation, and the federal deficit. Negotiations surrounding the debt ceiling, which will be reached October 17th, are expected to bring additional intensity to the political standoff.
Although there has not been a shutdown since 1995, shutdowns were commonly associated with budget agreements in the recent past. Between 1976 and 1995, there were a total of 13 shutdowns. The most recent (1995), was also the longest, lasting 21 days. The average duration since 1976 is 6.5 days. Among the government operations determined to be “non-essential” and have been suspended are most government data releases. The monthly Bureau of Labor Statistics’ Employment Situation report, considered by many to be one of most important indicators of U.S. economic performance, is just one example of a government data release that has been delayed.
Other examples include trade statistics and virtually all USDA reports. The collections of charts, graphs, and tables that appear in this publication include the latest available data. Several data series were updated in the time period between last month’s publication and this one. Other data have not been updated since their release was scheduled to take place after the government shutdown occurred.
Employment: Prior to the shutdown, figures were released for initial claims for unemployment. The latest four-week moving average was the lowest since May 2007, indicating that layoffs continue to slow. Although it can differ with government figures, an estimate from the private firm ADP, which manages payrolls for many companies, indicated that 166,000 jobs were added last month. Most economic forecasts suggest a similar figure. Both the ADP report and the consensus among private forecasters suggest payrolls expanded by a level near the recent average for the official governmental data (+180,000 January-August). About 800,000 federal government employees were furloughed in the shutdown.
Consumer Confidence and Spending: The Conference Board, another non-governmental data source, publishes the Index of Consumer Confidence. In September, this index decreased marginally, falling 2.1 points from 81.8 to 79.7. Among the potential reasons cited for the decline were concerns related to a government shutdown (the survey that is the basis for the index was distributed prior to the shutdown) and the threat of possible intervention in the crisis in Syria. Regardless, consumer confidence remains near the highest values posted since the onset of the financial crisis.
Consumer spending data for August were released prior to the government shutdown. In August, overall spending increased 0.2% month-over-month while spending on apparel decreased 0.7%. The July-August time period can be considered reflective of the back-to-school shopping season. During this time period, overall consumer spending was up 1.8% relative one year ago; consumer spending on garments was up only 0.1%.
Consumer Prices & Import Data: Consumer price data were also released in the period between last month’s Executive Cotton Update and the government shutdown. In the latest available data for August, the CPI increased for the fourth consecutive month and posted its highest reading since the fiber price spike in 2010/11. At their current level, consumer prices for apparel are up 1.6% year-over-year and are 7.6% higher than they were prior to price spike (August 2010). Import data have not been updated since last month’s publication due to the interruption in government reporting. The longer the government shutdown continues, the greater the potential impact for the U.S. economy. If a resolution is not made soon, the important holiday shopping period could be affected. An early forecast from the National Retail Federation (NRF) suggests overall holiday spending in 2013 will be 3.9% higher than in 2012. This figure is slightly higher than the growth registered last year (3.5%) and slightly higher than the ten year average (3.3%). Continued uncertainty regarding the government shutdown could pull consumer confidence and spending lower.
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-2.pdf”]U.S. Macroeconomic Indicators & Cotton Prices[/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-3.pdf”]Daily Cotton Price & Currency Data [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/09/2013-09-Executive-Cotton-Update-4.pdf”]GPD Growth & U.S. Interest Rates [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-5.pdf”]ISM Indices [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-6.pdf”]Leading Indicators & Consumer Confidence [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-7.pdf”]Employment [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-8.pdf”]Housing [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-9.pdf”]Industrial Production Inventory/Shipments [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-10.pdf”]U.S. Yarn Exports [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-11.pdf”]Consumer Spending[/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-12.pdf”]Industrial Production & Inventory/Shipments [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-13.pdf”]Trade Weighted Index & Asian Currencies[/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-14.pdf”] Currencies vs. U.S. Dollar [/pdf]
[pdf pdflink=”/wp-content/uploads/2013/10/2013-10-Executive-Cotton-Update-15.pdf”]U.S. Balance Sheet & Fiber Prices [/pdf][/pdfcharts]