(ThyBlackMan.com) It is regrettable that there were no lead stories among the African American press (print media or otherwise), which could have acted as a catalyst for a discussion of an issue of great import to the African American (AA) community. And that issue is the increase of the AA unemployment rate as reported by the Bureau of Labor Statistics (BLS) for the month of January. However, the majority white media across this country led with the unemployment rate story in every major media medium including print, television and electronic. Their reporting concentrated primarily on the decrease in the national unemployment rate and the number of jobs created. They left the African American media to report its own story. And guess what… that story is literally not being told, except here!
What has been put before us in regard this economy and its course over the next 90 to 120 days is a false narrative. The BLS has indicated the national unemployment rate decreased to 4.9 percent and the national economy created 151,000 jobs. What the BLS report failed to let you know is that the national unemployment rate
is a lagging indicator. The African American unemployment rate on the other hand, is just the opposite, it is a leading indicator.
You see, whatever change in our economy which caused the national rate to decrease or for that matter increase in the near future has already happened. By touting the decrease in the national rate of unemployment, federal policymakers are saying this economy has recovered; that the policies they have advocated and executed, primarily the policy of zero percent interest rates was just what the economy needed to get it back up and fully running. As a matter of fact, the Federal Reserve Bank (Fed), our central banker, felt so strongly that the policies of easy money worked; they begin to raise interest rates in December by a quarter percent and suggested it was willing to raise interest rates one quarter percent, as many as four times over the coming year. Interest rate increases tend to cause the unemployment rate to rise. As the cost of money increases, there is a good possibility hiring will slow or even stop, as higher interest rates cut into the profits of businesses.
The Fed’s aggressive outlook on the economy is a false and misleading narrative. The economy is not as strong as federal policymakers would have us to believe. The recent retail sales report showed retailers last year and this includes the Christmas holidays, had the worst year since 2009. This indicates we have an economy that is suffering from a lack of consumer demand. This is critical because we are a consumer driven economy as compared to say China, which is not. China derives the major portion of its income from exporting. The consumer, however in the United States, represents 70 percent of our economy or income. Think of it this way, the fuel used in your car is gasoline and ethanol.
The gasoline comprises about 90% of the mixture. Take away the gasoline and the car does not move. Your car is not designed to just run on ethanol. That is also the way the American economy functions. If you reduce the amount of money the consumer spends in this economy, the economic engine of the American economy stalls. And right now, the U.S. economy is stalling due to the reduced purchasing activity of the consumer. In the fourth quarter of last year, October to December, the United gross domestic product (GDP ) was estimated to be a paltry .70 percent. The quarter before, it was 2.00 percent. By the way, the 2.00 percent rate of growth in GDP is also considered to be a weak number. GDP is a measurement of the monetary value of all the finished goods and services produced in the United States.
Many of you are thinking at this point, what about the national unemployment rate, it dropped from 5.0 percent to 4.9 percent?! Isn’t that proof that the Fed’s and this administration’s narrative about the economy is correct? No, not at all. Although the national unemployment rate decreased based on the category of measurement called U-3, which is one of six measurement categories that can be used to gauge the health of the nation’s unemployment market. However, the U-3 category in terms of what it measures when it comes to unemployment is very narrow and limited in its scope. The more widely respected category of U-6 which this administration could use as the official unemployment rate category did not decrease.
It remained at 9.9 percent for the month of January, reflecting that there was no real improvement in the national job market. The U-6 category (http://www.bls.gov/news.release/empsit.t15.htm), as we have stated before counts those who currently are neither working nor looking for work but indicate that they want to and are available for a job and have looked for work sometime in the past 12 months and persons employed part time for economic reasons who want and are available for full-time work but have had to settle for a part-time schedule.
Additionally, one undeniable indicator of the sign of our times when it comes to the economy is the African American (AA) unemployment rate. As indicated above it can be used as a leading indicator of what is to come in terms of future lay-offs. African Americans are the first workers to face lay-offs as the economy sours and begins to deteriorate. Thus, the AA rate of unemployment can be an ominous sign to the rest of the working population if it is shown to be increasing. And that is exactly what it did in January; overall it increased from 8.3 percent to 8.8 percent according to the BLS.
The greatest increase was among black women which saw their rate spike upward from 6.9 percent to 7.9 percent, while black men saw a decrease to 8.4 percent from 8.7 percent. Black teenagers went from 23.7 percent to 25.2 percent (of course these are U-3 category numbers). The real African American unemployment rate is conservatively 18 percent based on the U-6 national rate of unemployment at 9.9 percent. It will move higher in the coming weeks and months as this slow down hardens into a recession!
Finally, Mr. Obama took credit for the unemployment rate dropping below 5.0 percent to 4.9 percent on Friday, February 5th in the White House briefing room saying, “We have recovered from the worst economic crisis since the 1930s, the worst in my lifetime and the lifetime of most of the people in this room, …” Mr. Obama, with all due respect as the first AA President, is just plain wrong when he states the U.S. economy has recovered from the 2008 Downturn.
This economy, even as he spoke, is deteriorating; moving us closer and closer to a recession over the coming weeks and months unless the issue of consumer demand is addressed which is the core cause of the current economic slow down and was the lingering cause of the 2008 Great Recession. It’s that simple! Consumer demand has never been addressed by this administration. Unless, it is addressed, it will be the cause of this administration’s undoing. It may even cause the Democrats to lose the White House as the results of the lack of consumer demand takes hold.
“The Fix This Time,” covers this issue thoroughly and offers a doable and effective solution to increase consumer demand. As this coming recession reveals itself, here are some tips; if you are a business, you should reduce your inventory to just in time; if you are an investor or someone with a 401k, you should consider going more to cash as stocks will continue to sell-off, and finally if you are a working individual, this is not a good time to change jobs, because as many of you know, the last hired is the first fired.
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).
