(flag) Photo by Karolina Grabowska/Photo by Tima Miroshnichenko
The latest U.S. inflation report for December has revealed several important points that affect Black Americans.
As inflation continues to impact households, especially those of Black Americans, there is a growing call for targeted policy measures to address the disparities. Economists emphasize the need for comprehensive strategies, including potential federal job guarantees, to mitigate the harsh effects on vulnerable communities.
“It’s going to be extremely devastating,” Dr. William Darity Jr., professor of public policy, African American studies and economics at Duke University, told CNN. “People will have to make very, very hard decisions about whether or not to purchase medicines or buy food or forgo payment of their utilities. It will have harsh effects on people’s well-being.”
Darity, a reparations advocate, pointed out that the wealth gap in the country has posed challenges for Black families in building financial savings or passing down wealth across generations, a practice that has been more accessible to many White families. He stressed that historical racist policies, such as redlining and the denial of land promised to former slaves, have consistently hindered the progress of Black Americans.
Here are five things Black America needs to know.
The report indicates that consumer prices in the U.S. increased more than expected in December. Americans experienced higher costs for shelter and healthcare, particularly impacting the overall inflation rate. This suggests that it might be premature for the Federal Reserve to consider cutting interest rates.
“The final stretch of the path back to the 2% inflation target could be harder than the market is anticipating,” Ryan Brandham, head of global capital markets, North America, at Validus Risk Management, told Reuters.
Despite inflation concerns, data shows that the labor market remains relatively tight at the beginning of the year. The unexpected fall in new claims for unemployment benefits indicates ongoing strength in the job market. This contrasts with expectations for a rate cut in March.
Persistently high inflation poses a threat to President Joe Biden’s chances for reelection. The rising cost of living has negatively affected Biden’s popularity, adding pressure even as other economic aspects, such as job growth, remain positive. Experts say economy has been just one of the factors for his declining support among Black voters.
Gasoline prices rebounded after a drop in November, and food prices, including groceries, experienced a consecutive monthly rise. The surge in egg prices, attributed to avian flu disruptions, reflects specific challenges consumers faced.
According to a study from the Federal Reserve Bank of Minneapolis, essential items like groceries, electricity, and wireless phone services constitute a higher proportion of the budget for Black families. The study also highlighted that Black households allocate a greater percentage of their income to goods and services subject to frequent price fluctuations.
Munseob Lee, an economist at the University of California-San Diego who co-wrote the study, told CNN that many Black Americans are also living in food deserts and paying higher prices for groceries at convenience stores. Inflation only increases the price on those convenience store products, Lee said. It also forces Black shoppers to have to travel father for groceries meaning they are subject to the higher gas prices, he said.
“If prices paid by white households increase by 7 percent over a year, our calculations suggest that one may expect them to increase by 7.5 percent for Black households,” the study stated.
Black families are expected to bear the brunt of rising inflation. Lagging behind in income, wealth, financial savings, and home ownership, Black Americans are more vulnerable to the negative effects of increasing consumer prices, Reuters reported. Historical factors such as redlining and land promises contribute to the wealth gap.
(flag) Photo by Karolina Grabowska: https://www.pexels.com/photo/american-flag-and-money-falling-down-4386420/Photo by Tima Miroshnichenko: https://www.pexels.com/photo/a-man-in-black-long-sleeves-counting-his-money-while-sitting-on-the-couch-6693648/
