We want to do a quick Black economic update with Election Day around the corner and the release of the October Jobs report. This article is fully sourced(22 Links), so it’s a great guide to where we get our economic information for our articles.
Summary
Overall, the economy, according to the statistics, is one of the best ever for Black people. But statistics are one thing and real life is another. Statistics and surveys don’t capture the deeper, short and long-term problems people face.
Black unemployment is at a record low: 5.7%. 22.8 million Black workers had jobs Black Labor Force participation was 63%, the highest since the 2008 recession. And Black median weekly wages were reported at $962 dollars a week or about $50,000 a year.
There was also some longer-term good news: Black homeownership has rebounded to 46% in the 3rd quarter of 2024, the number of Black businesses increased by 7% in 2021 (current data is unavailable), and the Black unemployment rate was only 50% higher than the White rate. Black Labor Force Participation was 63% continuing a slow advance since covid.
However, while the economic data is great, many people are struggling. They feel powerless. They feel like the government has done little to improve their incomes and opportunities over the past 45 years. Society does not care about people like me. And to a large extent, they are right. Lower-middle class incomes have stagnated, good jobs are hard to find and inflation from covid-19 has further reduced spending power.
Income and wealth inequality continue to grow. People face diminished opportunities, reduced aspirations, and lower incomes. They express this unfairness when discussing the economy. Opinion surveys about the economy have come to represent how people feel about society as a whole. Polls show that people have a consistent “Economic Nostalgia” (USA Today) for the past, despite being better off, now.
Am I better off? Are We better off?
Yes, in absolute terms we are all better off. Everyone has a phone, a flat-screen TV, a job, and a place to live. Everyone has the right to vote, access to education, and job opportunities. That was not true 45 years ago.
Many opinion surveys show that the American public does not believe they are better off.
But you have to unpack the simple question. Do I care only about the well-being of myself or my friends, family, neighbors, and the larger community? Is society better off?
I am older and have had a bunch of experiences: I worked at a Italian fruit market growing up, worked at a novelty warehouse during college, was homeless for a short time, and was unemployed after college. My grandparents lived on a farm, canned vegetables, and had outdoor plumbing until the 1980s. My grandfather worked for the railroad while my grandmother was a maid at a local college. Yet, somehow they managed to send five kids to HBCUs.
I had it easy, but a lot depends on your point of reference and what you are comparing yourself to.
The Employment Report
On November 1st, 2024, the BLS released the Employment Situation Report for October. The jobs report is the one key review of the labor economy. Once a month, for at least one day, the media covers the labor economy. Let’s look at some of the details.
Employers added only 12,000 new jobs due to the effects of hurricanes Helene and Milton, and a strike at Boeing. However, there were also major losses in temporary help and manufacturing. The national unemployment rate was unchanged at 4.1%. The number of unemployed increased by 150,000. There were 7 million unemployed people. Unemployment rose slightly for men and White workers. Many economists expect a slowdown in the number of new jobs created but not a recession.
Wages increased by 4.4% in October, as stated in the BLS report, continuing the trend of wages outpacing inflation. Weekly working hours were unchanged at 34.3 hours. The recent high was 35.0 hours just after COVID-19.
ADP, a payroll processing company, reported 233,000 jobs added in October. ADP may, be more accurate than the BLS since they process actual payroll services while the BLS relies on voluntary surveys. By the way, it is nice to see that the Chief Economist at ADP, Nela Richardson, is Black. Paychex Small Business Job Index reported an index value of 100. Neutral.
Inflation Rate. One of the best measures of inflation is how much people are actually willing to spend. The Personal Consumption Expenditure survey measures that. While consumers complain about inflation, they continue to be willing to pay higher prices. In September, consumers were willing to pay 2.1% more for goods and services compared to a year ago.
Corporate Profits increased by 3.6% as reported by the BEA in the second quarter of 2024 (Q2 2024). However, the St. Louis Fed Chart shows the growth of corporate profits over the past 14 years. Corporate profits have grown from $800 billion in 2008 to $3,400 billion in 2024. That is 325%. Large corporations are doing great.
Labor Costs increased by 3.9% over the last 12 months according to the Employment Cost Index Summary released on October 31st, 2024. Labor costs, in general, are about 30% of the cost of a final product but it varies by industry.
The Gross Domestic Product (GDP) was 2.8% as calculated by the Bureau of Economic Analysis (BEA). The rate of economic growth is higher than almost every other Western Democracy.
The BLS Diffusion Index (DI) measures the number of businesses adding jobs as compared to the number of companies reducing staff. DI is an important, forward-looking measure of future employment and recessions. An index value of 50 is neutral. The number of private sector businesses (250 industries) adding jobs was 56% while the number of manufacturing workplaces (72 industries) expecting to add jobs was 45%
Weekly jobless claims were small, historically. Only 218, 000 people filed for unemployment insurance.
Michigan Consumer Confidence Survey index was 70.1 in September up 2% from August.
Business Roundtable (BR) Economic Index. The business round table is a pro-business group of CEOs and executives. The BR Index provides insight into future corporate plans on capital investments and hiring. The BR index dropped to 79, below it’s historical average of 83. Plans for hiring decreased while sales expectations remained above average.
Purchasing Manager Index (PMI) was recorded at 48.5 in September.
Job Openings and Labor Turnover survey was the worst economic news of the bunch of economic survey releases. In September, JOLTS reported 7.4 million job openings down from 12 million in March of 2022. There are stories of difficulties in finding a new job among older workers, new college graduates, and old workers. There are also stories of “phantom” job postings.
The Federal Reserve Open Markets Committee which sets the US national interest rate policy, meets on Wednesday-Thursday (Nov. 6th – 7th, 2024) due to the election. If Trump wins, expect a “helluva” meeting. Trump has questioned Fed independence and has proposed tariffs on imported goods. If Harris wins, expect a short meeting with no change in interest rates and a congratulatory statement.
Wall Street Indicators
The best broad market measure of stock market performance and investment returns is the S&P 500 Index. The S&P 500 index closed at 5729 on November 1st, 2024.
Wall Street makes money in many ways. One way is “betting” on changing market conditions and volatility. However, the economy has been very stable. A good measure of market volatility is the VIX index. The index is currently at 21.88 at the end of trading on November 1st. It has traded around 20 since August of 2024.
Other measures
U-6(BLS): A measure of anyone who wants to work was recorded at 7.7% close to the record low of 6.8 percent before covid and in the year 2000.
US “Real” Black Employment Rate. As is our custom, we take the difference between the national unemployment rate (4.1%) and the Black unemployment rate (5.7) and add the difference to U-6(7.7%) to get the “Real” black unemployment rate: 9.3% of black people want jobs.
Job Quality Index (JQI). The University of Buffalo has been measuring job quality since 1990. It has been deteriorating since they started measuring in 1990. The current index is 84 out of 100.
Google Trends: “Recession” shows no indication of people searching for the word “recession” above average which can be interpreted as the public has little fear of a snort term recession.
Summary
Overall, by many measures, the US economy is doing great. The Fed has managed inflation well and the post-Covid fiscal stimulus stepped in when needed. We expect this trend to continue at a slightly reduced rate for the foreseeable future.
However, the average person feels left out and without control of their economic destiny.