The black unemployment rate stands currently at 14.4%. Blacks usually bare the burden of any increase in unemployment, as they are usually the first laid off as the economy sours and turns downward and are the last recalled as the economy turns upward. This to some extent is reflected in the current unemployment rate figures for June. The rate of unemployment for white males stood at 7.0% while black male unemployment for June was 14.2%.
To understand the U.S. economy and what drives it, you have to look under the hood and identify the major components of its engine. Those components are consumer spending, government spending and exports. Of these three major components, the consumer is the most important, as the consumer represents approximately 70% of the economic activity of this economy. What does that mean? It means we are a consumer driven economy and not an export economy, like China, which depends primarily on shipping goods to other countries.
We also are not an economy which survives on government spending. These two components, government spending and exports make up in part the 30%. While government spending and income from exports are important, it is the consumer who is the primary driver of this economy. Think of it this way, the fuel used in your car is gasoline and ethanol. The gas 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 the way the American economy works, also. If you reduce the amount the consumer spends in this economy, the economic engine of this economy stalls. This is exactly what happened, the Commerce Department report also showed consumer spending slowed to an annualized rate of 1.5 percent from April through June, down from 2.4 percent in the first three months of the year. The rise in automobile sales slowed along with other goods. Why did the consumer reduce spending? You can speculate that people with jobs have become in general more cautious as they see the unemployment rate rise.
What is the answer? …