This is where you saved your own life. I think if you fell for the sunk cost fallacy and decided to keep going, you would not have been posting this, and instead we’d be reading a memorial about you at some point.
Remember this when you’re doing your review of the ways you screwed up and are flagellating yourself. You ultimately made the right decision. Later than you should have, but still, you did it, and saved your life and your friend’s life.
Most SAR support outside of National Parks is done by local resources, i.e. volunteer local search and rescue organizations backed up by sheriff’s departments (and for natural disasters and mass causality events National Guard support). Some of this does get federal funding or surplus equipment but the bigger concern is misallocation of National Guard units (as recently witnessed in California) and impact to firefighting and disaster response support.
Yeah, the o.p. kept their head, was attentive to and kept their companion moving, and facilitated rescue by being aware and alerting rescuers to their presence. Sometimes things just go wrong on the trail in excess of your experience and preparation and the best you can do is keep a cool head and make the best of the situation instead of panicking and want]ding in circles. I’m a very experienced backcountry hiker and I’ve made a few errors in judgment that were fortunate to not go severely wrong, the worst being a potentially dangerous hard fall on a solo trip that had it resulted in more than bruises and having to bushwhack could have been deadly. I’ve also leaned to not second-guess an instinct that something is wrong or beyond my level of experience and tale the safer route but all of that comes with (sometimes adverse) experience.
Loose cotton and linen is great in the desert where the wicking and breathability are an advantage over wool and most synthetics; pretty bad everywhere else, especially as a core layer or for socks.
Stranger
This is important and always good advice. I hike a lot in our local Sierra and I feel like I get clues and warnings sometime, such as on a downhill a slip not resulting in a fall is a signal to slow down and pay attention. On a peak climb a couple weeks ago I stopped to catch my breath and thought “That looks too steep to go up safely, I better go over that way…” or postholing thru a snow field and thinking I better go around the long way. It’s important to listen to your gut feeling out there.
@FloatyGimpy, just adding my best wishes – I’m so glad all’s well that ends well. You learned valuable lessons and taught us some, too. Thank you for sharing your humbling experience – and what a relief that you and your friend are safe and sound!
No shade intended towards the OP or their hiking companion but this Ed Viesturs quote comes to mind:
“Getting to the top is optional. Getting down is mandatory.”
[I haven’t read the replies]
The only thing worse than a harrowing tale like that is a harrowing tale well told.
Like that one.
I hope you’re both okay.
I always carried a lot of stuff on my back, even for day hikes (both for preparedness and for the extra exercise of carrying superfluous weight), but all that really ever did was to shift the odds a bit in my favor.
There ain’t no guarantees up on the mountain.
“Any landing you walk away from …”
I did backpacking and survival as a class in college, and that was one thing they drilled into us. Wool and similar materials are great. Cotton is dangerous.
It’s better to prepare for cold weather with your gear than warm weather. You can shed layers if you have too much, but you can’t add layers that you didn’t bring.
I’m no expert by any means, but I would think that going layerless in the desert is a recipe for severe sunburns.
Stark naked, yes. 
You could still use wool as a cover, even if it’s not ideal. And we were hiking in the mountains, we didn’t have to worry too much about desert conditions.
I learned all of this from “@Atamasama In The Atacama.”
[Sorry, Frodo, but being only a single country off is pretty good for a Yank :-)]
Nature truly is unforgiving. (Great information in your posts here, Stranger.)
@FloatyGimpy, thank you for sharing this with us. I’m so glad you’re okay, and glad for your friend that you made good decisions and (likely) kept him alive.
Impresive!, you event got the continent right 
Some deserts have mountains, too - or, to put it slightly differently, some mountains have desert-like conditions, especially during days in the summer.
Stranger posted the principal exception to the “no cotton” rule, and rightly so - a non-breathable layer in the desert while exercising can bring on heat stroke in a hurry. For the OP’s situation, and the situation in most places with more typical temperatures and humidity, clothes that can keep you warm when they’re wet are important - and are even important in areas like Arizona’s sky islands, where temperatures plummet when the sun goes down and clothes worn for comfort during the day insulate poorly when it cools off.
@FloatyGimpy , you kept your wits about you and made it back when things could have gone badly wrong. It’s good to hear you came out of it OK.
Someone once told me something that sums up the key point that @Stranger_On_A_Train, @Broomstick and others posted. Namely, that your group is only as prepared as the worst-equipped member. So figure out who that is and be sure when disaster strikes to kill and eat them first.
Second part of that may have been tongue-in-cheek, but the first part is spot on.
A weird thing I just now remembered is when I blew the airhorn it felt like sparks were coming out of it and burning my hand.
I well remember a five day trip into Mt.Lassen, many years ago now. I went with one experienced friend and one who had never done anything but camping out of a car. We gave her a list of what to bring, and she essentially ignored it, thinking we were being fussy. She was hiking in old red Keds, I remember. The fortunate thing was the weather stayed nice.
I had carried all these emergency and first aid supplies for years and never used them. Ditto my friend Ellen. We used pretty much everything on our third friend – the moleskin, the ace bandage, the emergency blanket, the extra socks, the extra hat, the sunburn kit … it was still a fun trip, but after that, I started having my less experienced friends lay all their gear out to review before we packed up. I’m sure they thought I was a tightass, but the margin of error in the back country is sometimes sliver thin.
When you sounded the horn, the compressed air expanding made the can cold to the touch. When I’ve been really cold, cold water, wind etc, can actually feel like it’s burning. The cold can probably felt like it was burning your hand.
It’s been so difficult for me to process just how close we came to dying. It’s even worse than I’ve described. When I was standing there, looking up at the last peak and back to my friend trying to decide which was the better choice, to go or to call for help, the way up was the wrong way. I found out after we’d been rescued and I was home that the trail up was the wrong trail. If I decided that we would try to keep going, we needed to go straight ahead, not up the last peak. Going up would have certainly meant tragedy. I just keep playing it over and over in my head.
So glad you and your friend lived to tell the tale, @FloatyGimpy !
For anyone reading this thread who appreciates similar tales, may I recommend the YouTube channel “Kyle Hates Hiking”?
Kyle tells true stories of narrow escapes, hiking disasters, amazing rescues, true crime on hiking trails, and more. Throughout it all he remains calm, understanding, and nonjudgmental (don’t read too much into the titles of his episodes; they tend to be a little click-baity because he is understandably trying to get more views, but when you actually watch him he is level-headed and thoughtful).
He also donates to volunteer rescue organizations, and urges his viewers to do the same. All in all, he seems like a pretty decent human being who tells fascinating true stories of hiking adventures, some with happy endings and some with tragic ones.
Floaty, It sounds like you may be feeling some PTSD. I’d think that would be pretty normal and expected.
So glad you made the right choice when it really mattered.