Blair, Lauri
Journal #3
African-American Consumers and the Economic
March 30, 2010
202-07
Dr.Ferdnance

1) Create a detailed consumer profile of the average African-American household. Find the average income, wealth, and primary purchases of the African-American household. Compare and contrast the consumption pattern of the African-American with European, Asian, and Hispanic Americans.
African-American household
Average income- $37,150
Wealth- $6,000

White Household
Average income- $55,463
Wealth- $88,000

Comparing African American households to European, Asian and Hispanic Americans, African Americans have the lowest income. Second of all, in response to a lower income theoretically one would think that African Americans would save more and spend less and begin to invest, yet in response to poor financially education, and decisions African Americans spend more than any other race on materialistic things.
African Americans spend a large amount and above any other races median in clothing, video game hardware, pc software and shoes. African Americans have been found to be very brand loyal to body soap, sneakers, potato chips, soda, hair products, and cookies and nail polish.

African-American/Black Market profile found that African Americans are very persuaded through marketing, such as commercials, music videos, radios, and locals ads to buying cars, car accessories, communication gadgets and cosmetic products, and theses products are not being differentiated or improved, but marketers have learned techniques to persuade the African American race to purchase. 2) Given your consumer profile of the average African-American household, create a graph to illustrate the current economic status of the average African-American household. Describe your graph in detail, both theoretically and factually. Be sure to use mathematics in calculating your budget line.

The current economic status of African American households has been consistent since 2000, when African-Americans first entered a depression. The current recession just added to the steady loss and low income. African-American households in the 2008 census were found to have an average income of $34,218, and in 2003, $37,150.

African American Budget Line x-axis: Clothing y-axis: Rent
Hampton Area more African Americans average $500-$650 Rent: $6900 Clothing: $4200 Budget: $34,537

3) Illustrate and explain with specific data what has happened to the average African-American household as a result of the foreclosure crisis, the financial crisis and the current recession. Be sure to back up your graphical analysis with researched facts about how these events have affected African American households.

Foreclosure Crisis: Banks targeted specific group such as African Americans, which did not meet the financial criteria based on credit, employment, and income. Banks gave numerous subprime mortgages to non-qualified African Americans, which were very risky loans. These subprime loans got African Americans to buy more homes, yet the payments shortly after ballooned, which forced individuals which already purchased a home out of there means, to come up with more income to pay a higher mortgage which they could not afford. After the loans began to balloon African Americans could not pay for the mortgage, finally the banks were faced with the issue that the homes value was below the amount owed several African American homes became foreclosure in attempt to collect a portion of the non paid debt. Small business, and services were no longer able to keep up or receive loans from banks, and forced to down size resulting many African Americans to become unemployed.

In 2004, African American homeownership increased to 49%, in 2007 fell below 47%, in response to the foreclosure homes since the recession the African American homeownership will continue to decline in result of the recession and ballooned prime mortgages.

Financial Crisis: The current recession affect on the African American labor market is an increase in unemployment rates, which is a negative affect on the labor market. The negative affect on African Americans impact on the economy is affecting the labor market, firms are downsizing which is resulting a decrease in the demand of labor. The African American unemployment rate was found at 8.3% in 2007, and expected to be at 11% by the end of 2010, these figures are both double the white unemployment rate.

Current Recession: The recession has definitely targeted African Americans, receiving double the trouble in every aspect from homeowners, employment, business owners, entrepreneurs, youth, education and many other areas. Economics Policy Institute stated, “When white America is in a recession, black America is in an economic depression.”

4) Use a flow chart of the African-American community to illustrate how our spending and consumption patterns weaken the economic development potential of the African-American community. G+S:

Producer (African American Business Owners): African American businesses have a failure rate of 80% within first two years; many business owners cannot get loans or start a business with enough funds for the business to survive. African American businesses often do not employee within the African American race and also cannot employee enough to increase employment rates drastically. Many educated African Americans do not desire to work for African American businesses primarily because of low wages, and non-steady employment. Often individuals who could be hired are back in forth from jail. African Americans have very few investors in response to the high failure rate. The little profit that is attained is not spent on investment for business growth yet used for survival of the business. Resources: Many African American communities are built in lower economic areas such as near, plants, warehouse or manufacture areas. In these geographic areas, we find a vast amount of pollution, which is a health hazard. African Americans are also found to have less health coverage and health concern yet with all this pollution centered in the community are in great need of health care. African Americans lack of capital is a primary reason for living in these areas, lack of health coverage and reasoning for why making changes is so complex. A lack of capital is also a primary reason investments are low, and land in beneficial areas is not owned. Households (consumers) African Americans have been found to be the highest consumers, yet we still do not buy within our community or directly from African American owned businesses. In conclusion, African Americans are making others rich and not supporting our own.
5) Describe and discuss in detail three specific examples on how African-Americans can modify their consumption patterns in order to improve the economic status of the African-American community. A few techniques African-American can take to modify current consumption patterns: 1. Understand: Identify the current problem and understand the difference in wants and needs. 2. Educate: Educate African Americans about personal finance as a whole from those in school, workforce, on government assistant, young, middle class, elder reach out to the whole African American race in financial education. 3. Set-up realistic attainable goals, and give motivation for budgets that are geared, to save, invest, and improve overall spending habits, and support our own African American businesses.