WASHINGTON (NNPA) - Despite an economy represented by high unemployment rates, a home foreclosure crisis and low consumer confidence, African-American buying power is projected to reach $1.2 trillion in 2013, according to a report conducted by the University of Georgia's Selig Center for Economic Growth.
The report "The Multicultural Economy" published in late 2008, estimates that African-American consumers' share of the nation's total buying power will increase from $913 billion, resulting in a contribution of almost nine cents out of every dollar that is spent.
Despite this predication, economists believe that consumption by African-Americans will not only fall, but that African-Americans will also continue to be the brunt of high unemployment, suffer an increase in poverty and suffer from a reduction in wages and income.
"African-American consumers' share of the nation's total buying power will rise to 8.8 percent in 2013, accounting for almost nine cents out of every dollar that is spent," the report states. It partially credits population growth as well as the growth and expansion of African American-owned businesses as the reason for the projected rise in buying power.
"We're in the middle of a fairly severe economic crisis," said Algernon Austin, director of the race, ethnicity and the economy program at the Washington, D.C.,-based Economic Policy Institute. "It looks most similar to the one over the 1980s and during that time, we saw reductions in the median family income and an increase in poverty for Blacks."
In his "Reversal of Fortune: Economic Gains of 1990s Overturned for African Americans from 2000-2007" study published in 2008, Austin writes that while the economy has grown significantly since 2000, African-Americans have not been a part of America's prosperity due to an increase in unemployment rates, a decline in the homeownership rate, an increase in poverty rate and an increase in crime.
In regards to income and wages, the African American median family income declined by $404 or 1 percent and the median weekly wage for African American workers ages 25 to 54 years old declined by 0.2 percent. The weekly wages for African Americans differ by gender—particularly, the median weekly wages of African American men declined in 2007 by 3.4 percent from $649 to $627, while it increased for women by 2.6 percent from $552 to $566.
William Spriggs, chair of the economics department at Howard University, says that not only will Black consumption fail, but that although the number sounds hefty, their buying power is not in fact high. He says because the U.S. economy is so huge, African-American buying power is currently only 6 percent of total U.S. consumption.
Buying power is defined as the total personal income of residents that is available after taxes, excluding money that is borrowed or saved from previous years. It is not a measure of wealth. Austin says people should be careful not to assume an increase in buying power means an increase in wages and income and an increase in standard of living when it's not necessarily the case.
Essentially, the buying power number is most useful for those who are interested in developing and marketing their products to a certain market segment; Entrepreneurs, established business, marketing specialists, economic development organizations, and the chamber of commerce now seek estimates of the buying power of racial and ethnicity groups, according to the report.
While the report states that Black people spend more on telephone services, children's clothing, footwear, and groceries, the Bureau of Labor Statistics' Consumer Expenditure Survey, 2007, shows Blacks spent the most on housing, transportation and food, at $13,494, $6,458 and $4,601, respectively.
President and CEO of the National Urban League Mark Morial says that African-Americans are not aware of their collective buying power.
"We need to recognize how much power we have and [we can use that] to build wealth in our own community," he said. Morial noted how there is a 55 percent gap between Blacks and Whites when it comes to economic measures and that this disparity has been difficult to close.
"We should be saving for our children and their education. We should also focus on saving for retirement."