The Next Recession Will be Televised as it Hits Blacks & Hispanics the Hardest

by Sep 12, 2019Article0 comments

In my earlier messages, I addressed President Donald John Trump’s assertion about the U.S. economy that, “This is the greatest economy that we’ve had in our history, the best.” Let me be clear, it’s not. Trump’s trademark hyperbole consistently takes favorable economic news and then wildly exaggerates it in his boast of record achievement.

Trump’s “record of achievements on the economy and jobs ignores the Roaring Twenties, the war-time boom in the 1940s, the 1990s expansion and other times when unemployment was lower than now, economic growth was higher than now, or brisk productivity made the U.S. the world’s economic powerhouse,” per AP Fact Check, June 4, 2018.  

From the same source with bold added, “Economists generally describe the U.S. economy as healthy for the moment, but they’re naturally cautious about claiming that it’s without weaknesses. An economy this large and diverse has a way of thwarting any hubris. What looks phenomenal at one moment can be the source of a downfall later. The happy days of the 1920s gave way to the Great Depression, the tech boom led to a burst bubble, and the surge in homeownership in the mid-2000s led to a devastating crash.”

It is logical to this observer when we fail to learn from history it will almost certainly rhyme, if not repeat itself. It is particularly worthwhile for minorities to learn from the past since we are all too familiar with the reality of last hired, first fired. No one needs to predict the future to prepare for it. And in the throes of shock and awe, whether caused by nature or by man, there is no time to get ready.

Median Wealth Drop

By the End of The Great Recession

  • 66% for Hispanics
  • 53% for Blacks
  • 16% for Whites

Source: Pew Research

 A 2011 Pew Research report revealed that at the time the Great Recession ended in 2009, “That median wealth fell by 66 percent for Hispanics and 53 percent for Black households. Those numbers compare to only 16 percent with White families. As a result of these declines, the typical Black household had just $5,677 in wealth (assets minus debts) in 2009, the typical Hispanic household had $8,325 in wealth, and the typical White household had $113,149,” the report noted.

Uneven Economic Recovery

Median Wealth in 2016

  • $97,300 Nationally
  • $171,000 for White Families
  • $17,100 for Black Families
  • $21,000 for Hispanic Families

Source: Pew Research

What recovery?

“On a national level across all races, the top 1% captured 85% of post-recession income growth from 2009 to 2013,” according to an Economic Policy Institute study on income inequality, reports Yahoo Finance, August 30, 2019. The study found while some states recovered 100 percent of those gains, however, when race was taken into account, Blacks and Hispanics haven’t fared nearly as well as their counterparts.

Minorities were hit particularly hard when the housing bubble burst, “which eventually triggered the recession in 2007,” notes the same Yahoo Finance article. “Homeownership rate for Hispanics fell, hitting 47 percent in 2009 from 51 percent in 2005.” The study also notes that this might be due to the ‘disproportionate share’ of Hispanics who live in California, Nevada, and Arizona, some of the states that saw the steepest declines in housing values since the real estate market bubble in the 1990s.” By 2009, “the Black ownership rate was 44.5 percent, down from 49 percent in 2004,” according to the National Association of Realtors. “The White ownership rate by the end of the recession was 71 percent, down from 76 percent just five years prior.”

 ‘It’s like déjà vu all over again.” – Yogi Berra

 “Many American Blacks today are already experiencing a silent economic depression that, in terms of unemployment, equals or exceeds the Great Depression of 1929,” says the 2009 report “The Silent Depression,” from the nonpartisan organization United for a Fair Economy. Minorities were also hit the hardest when the economic downturn caused the unemployment rate to soar. Approximately 8.1 million jobs were lost starting in December 2007. By October 2009 the unemployment rate was 15.7 percent for Blacks, 13.1 percent for Latinos, and 9.5 percent for Whites, according to a 2010 study from the University of Illinois Institute of Government & Public Affairs.

7 Ways to Help Recession-Proof Your Finances

1. Pay down or pay off debt.

2. Increase your emergency savings.

3. Work towards the habit of saving 20 percent First & spend 80 percent Second. Repeat every month.

4. Establish personal financial goals for life after your last paycheck.

5. Secure sufficient life insurance in the event of income loss due to premature death.

6. Determine in advance how much loss you can accept.

7. See how you can design your portfolio to perform within your loss parameters.

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