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As inflation in the U.S. remains at a 40-year high clouding fears of a possible recession, at least one ray of sunshine has come to light: low unemployment rates among Black Americans.
The release of September’s jobs report has the White House celebrating the addition of over 263,000 jobs and the lowest Black unemployment rate since the pandemic began.
Historically, Black unemployment rates have almost always been at or near double the overall national rate in modern history, an issue Biden has sought to address. The U.S. unemployment rate declined to 3.5% in September, and the Black unemployment rate fell to 5.8%.
September’s low rate contrasts with the sky high 16% unemployment rate Black Americans experienced in May 2020, during the height of the pandemic. It’s also much lower than the 9.2% Black unemployment rate Biden was tasked with lowering when he took office in January 2021.
“What that tells you is that this is a strong job market providing a lot of opportunities for people who are seeking work, and that’s a very important tail wind right now in this economy,” White House Economist Jared Bernstein told The Black Wall Street Times on Friday.
The Black Wall Street Times managing editor @indepthwithDeon spoke with White House Economist Jared Bernstein on Friday about whether efforts to lower #inflation will negatively impact the lowest Black #unemployment rate since the pandemic began. pic.twitter.com/53bksAr1av
— The Black Wall Street Times (@TheBWSTimes) October 8, 2022
Inflation threatens recession
Adding to the positive numbers, Black teen unemployment has reached a nearly historic low of 12.7%. Meanwhile, Hispanic unemployment has reached an all-time low of less than 4%.
Despite the welcoming news that the U.S. economy appears to be finally accepting workers from all racial backgrounds as full participants, efforts to lower inflation make it unclear whether these low unemployment rates will last.
Inflation refers to a broad rise in the prices of goods and service across the economy over time that limits an individual’s purchasing power. Caused by multiple factors, from supply issues and sanctions against Russian oil to economies recovering from the pandemic, the current record-high inflation rate is threatening to cause a recession.
On Monday, Jamie Dimon, chief executive of JP Morgan Chase, the largest US investment bank, warned that U.S. and global economic indicators foretell of a recession in 2023, according to the Guardian.
“These are very, very serious things which I think are likely to push the US and the world – I mean, Europe is already in recession – and they’re likely to put the US in some kind of recession six to nine months from now,” Dimon said.
Inflation and unemployment
Meanwhile, for weeks the Chair of the Federal Reserve has hinted that there may need to be a raise in unemployment to lower inflation as employee wages continue to climb nationally.
The idea is that by giving employees less bargaining power, employers will have less business costs and will therefore be more likely to maintain regular prices. It rests heavily on hoping employers will do what’s best for the economy rather than their bottom lines.
“He can’t quite say this, but if the unemployment rate goes up to 4% or 5% or 6%, inflation will [probably] be tamed a bit,” billionaire investor David Rubenstein told CNN of Fed Chairman Jerome Powell, whom he hired a quarter-century ago to work in private equity.
“But he can’t come out and say, ‘I hope the unemployment rate goes up to 6%.’ That doesn’t sound politically very attractive to say that.”
Some politicians, such as U.S. Senator Elizabeth Warren, have opposed the Fed’s method of attempting to lower inflation by raising interest rates on borrowing money.
.@federalreserve’s Chair Powell just announced another extreme interest rate hike while forecasting higher unemployment.
I’ve been warning that Chair Powell’s Fed would throw millions of Americans out of work — and I fear he’s already on the path to doing so.
— Elizabeth Warren (@SenWarren) September 21, 2022
Yet, some financial leaders have stated bluntly they expect unemployment to worsen amid efforts to get the economy under control.
“I do anticipate that accomplishing price stability will require slower employment growth and a somewhat higher unemployment rate,” Susan Collins, president of the Federal Reserve Bank of Boston, said in a speech at the end of September.
With a tightening labor market and rising wages, the economy certainly has made rebounds in the areas of unemployment. Yet, efforts to lower inflation could have a negative impact, something White House Economist Jared Bernstein continues to observe.
“We need to ease these price pressures. And what we’d really like to see happen is for those pressures to come down without unemployment going up much at all,” White House economist Bernstein told The Black Wall Street Times.
“It is hard to imagine a scenario where the Fed gets inflation to where it wants it without some increase in unemployment. But our goal is to ease those pressures on behalf of families, especially in communities of Color where that often hits quite hard, and to do so while maintaining those gains.”