A uncommon occurrence in a market that has normally seen continuous high prices since the recovery during COVID-19, the Consumer Price Index (CPI) for apparel in the United States fell 1.6% in January compared to the previous month. Cotton Incorporated reports a tendency of stability at historically high levels despite this monthly decline in garment prices, which were still 0.4% higher than a year earlier.
Though they have been rising over the previous ten years, clothing prices seem to have levelled off. CPI numbers approached 123.0 from 2012 to 2014 in line with the 2010–11 fibre price spike. The current flatness in pricing could point to a shift in consumer demand or market competitive forces.
Clothing import volumes have soared recently; apparel shipments to the US have climbed at least 15% year over year since October. Based on Cotton Incorporated’s Executive Cotton Update, US Macroeconomic Indicators & the Cotton Supply Chain, these imports surged by 26% in January compared to the same month last year.
Industry analysts credit shops refilling inventories following past cuts, preemptive stocking in expectation of tariff increases, and probable legislative changes impacting de minimis shipping for this surge.
But as the Conference Board’s Consumer Confidence Index dropped by 7.0 points in February to 98.3, the retail industry is clearly in economic flux. Though the index stays within the usual range of 95-115 recorded since 2021, this represents the third consecutive monthly drop and is the biggest reduction since August 2021.
Consumer expenditure slowed down in January as well, declining by 0.5% month over month—the first decline since January 2024. Spending on clothes, on the other hand, bucked this trend, rising 1.1% month-over-month and 1.5% year-over-year to indicate a consistent interest in garments despite more general economic uncertainty.
The trade scene is still erratic, especially in light of recent tariff hikes applied on important US trading partners. Following a January plan including Mexico and Canada but later shelved, a 10% duty rise on imports from China went into effect on February 4.
Though some categories were spared, a second wave of tariffs was imposed on imports from Mexico and Canada on March 4, charging 25% levies. An extra 10% duty on Chinese goods brought the overall tariff rise for 2025 to 20%.
While Mexico has not yet stated any countermeasures, China and Canada have responded against these taxes. As the Executive Cotton Update notes, the continuous cycle of tariff negotiations keeps economic estimates in flux and raises questions about Federal Reserve policy and consumer spending given inflationary concerns could affect both.
The US labour market stays strong in spite of these financial difficulties. Though federal government employment dropped somewhat, the economy added 151,000 jobs in February, in line with past patterns. From 4.0% to 4.1% the unemployment rate slightly changed, but it stays under the limited range of 3.9–4.2% seen since early 2024.
With average hourly wages rising in February by 4.1% year over year, wage growth has exceeded inflation. Although this number is less than the post-stimulus peak of 7.0% in February 2022, it has regularly outperformed the inflation rate, which was 3.0% year over-year in January.
