(ThyBlackMan.com) For African Americans(AA), having some grasp of how the economy works will make a difference in how well the AA community fares in 2016, because African Americans have the highest unemployment rates of any worker group tracked by the Bureau of Labor Statistics (BLS). If you don’t understand what to protest for or against, you are going to get crushed by your enemies. It is the economy that will be ground zero when it comes to the fight for economic freedom in 2016. To be successful in that fight, the AA community has to get up to speed when it comes to understanding the rudiment workings of the U. S. economy as it is today. So let us take a look at this economy and the issue of cheap gas. It is not as difficult to understand as you might imagine.
When you look at the all the numbers tossed out at you via the national media when it comes to the economy, the one that stands out the most and is talked about most often is the price of gas. You ever ask yourself why is gasoline so darn cheap right now! Well, it is because of the Chinese manufacturing floors. Advanced economies, such as the United States and Europe are always in the hunt to find the cheapest labor markets in the world. They do this to be competitive in pricing when it comes to selling goods and services. Think of Walmart’s slogan of “Always the lowest prices.” China with a population of 1.4 billion people, mostly poor, became a country of 
choice for many corporations and businesses in their quest for cheap labor. In recent years, leading economies around the world in an effort to stay competitive in various industries outsourced labor to China. As a result, China replaced the factories, which at one time manufactured goods here in the United States.
Naturally, with the majority of world’s manufacturing of labor intensive goods from toys to vacuum cleaners being made in China, it would logically follow that China would become the largest energy consumer and importer in the world. In order to power those new factories, China’s need for electrical energy grew rapidly. What produces most of the energy used around the world are fossil fuels such as oil, natural gas and coal. As a result, China became the largest importer of oil in the world, because of its inability to produce enough oil on its own to make enough energy to power its factories. Every thing was humming along smoothly for China and indeed the world, and then The Great Recession of 2008 happened.
In comes the Federal Reserve Bank (Fed) whose job it is to resolve the fallout connected with the issues of high unemployment and business disasters associated with The Great Recession. To do this, the Fed adopted an interest rate policy of near zero percent to get the U.S. economy rolling again. Easy money made available because of the Fed’s low interest rate policies helped businesses and corporations. This cheap money put the business world back on its feet. And so these businesses and corporations were able to continue in many instances as before.
The Fed however did little to re-establish the consumer which is 70 percent of the activity of this economy. The impact of the 2008 Great Recession caused the national unemployment rate to rise and top out at 10 percent in October, 2009, with the black unemployment rate later topping at 16.8 percent in March of 2010 according to the BLS. The consumer, even with the availability of cheap money, never sufficiently recovered from The 2008 Great Recession. Thus, the consumer slowed in their spending over a period of time, reducing the demand for goods and services made by businesses and corporations the Fed’s easy money policies helped to re-establish. When the demand for products and services slowed, corporations and businesses of the biggest economy in the world, the United States, slowed in sending (feeding) orders to the Chinese manufacturing floors. When these orders for labor intensive products dropped, China’s need for oil, coal and natural gas to run its factories also dropped.
It was inevitable, with the biggest buyer of oil exiting the market, which of course was China, that the price of oil would plunge. It was around January of 2014 that the fall in oil orders from China became apparent, when the index known as the PMI index (Purchasing Managers Index) showed a decline to 49.6. This was under the 50.6 that was projected. It was the first indication that Chinese manufacturing maybe contracting for the first time in six months.
In summary, cheap gas maybe a bonanza to some but ultimately the chickens it hatches must come home to roost in the form of future laid-offs because cheap gas is indicative of lower manufacturing activity as shown by China’s declining need of oil. When China reduced it need for oil, the price of a barrel of oil fell precipitously. Lower manufacturing activity is an indication of a drop in consumer demand as shown by the drop in orders to Chinese manufacturing floors; and a drop in consumer demand is indicative of higher than normal unemployment which is the condition of the United States and most advanced economies’ labor markets ( https://thyblackman.com/2015/11/12/the-rip-off-of-african-americans-and-the-unemployment-rates/ ). No matter what the talking heads on television tell you, economies around the world are slowing. As you watch the price of oil and its consistent decline, it means basically one thing, the economies of the world are not getting better but getting worst!
If there any barometer of what is going on with our economy, the price of oil and gasoline which is oil’s by-product is a good one to watch. The lower the price of gasoline, the more troubled are the world’s economies. If the oil is not being brought and used to power the factories of the world which would cause the price of oil to increase (not decrease), you can assume those factories are closed or either in the process of closing and workers are being laid-off. With reduced orders being sent to Chinese manufacturing floors, which precipitated the slide in oil prices…, you can bet within the United States, higher unemployment rates are not far behind!
Staff Writer; James Davis
This talented brother is a graduate of Florida A. and M. University(FAMU), a former stockbroker, and a human rights activist who resides in Sanford, Florida. He was awarded the prestigious Governor Haydon Burns Scholarship to attend FAMU and while at FAMU was awarded the first Martin Luther King Scholarship. He is also author of three books, among them are “The Fix This Time,” Expanding Social Security Benefits to Create Jobs and Spur Demand( http://www.amazon.com/dp/B00MI3PD2M ) and “Hey…God’s Talking To You,” The Study Book ( http://www.amazon.com/dp/B00GYI3VQW ).
He can be reached through his blog @, (http://www.thefixthistime.com).
