MacroMonitor Market Trends Newsletter July 2020
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Black Households' Financial Challenges
From the many items measured by the MacroMonitor, various types of analysis are possible. The wealth gap analysis below illustrates the pervasive and persistent problem of net-worth disparity between Black Households and White Households. Over the past three decades, Black Households, on average, have significantly less wealth than White Households do.
There is no lack of reporting about the status of Black Americans. Decades worth of problems are being placed in the spotlight once again. "This time feels different," say several noted journalists. The COVID-19 pandemic exacerbates an already inequitable situation as the virus claims a higher proportion of black lives than that of other ethnic groups. For Black Households, lending practices translate to what is available and what constitutes affordable housing, which is often in neighborhoods close to pollution—proximity to pollution is frequently cited as the reason for higher rates of chronic health conditions. Poor neighborhoods typically have higher crime rates than middle-income neighborhoods as well; crime rates also put Black residents' lives in danger. Factors such as below-average levels of education (both high school and college), household income (frequently the result of single-earner-household status), and credit access (unbanked, under banked, and low credit scores), combine to make for low financial assets (real estate, savings and investments). Factors such as higher levels of single-headed families, higher unemployment and underemployment, and fewer jobs with benefits (health insurance, child care, retirement accounts, and so forth) lead to greater financial insecurity. The majority of Black-headed Households face a daunting number of challenges!
Because of physical-safety concerns and profitability issues, some retail chains and small business owners are reluctant to open stores in black neighborhoods. As a result, many of these neighborhoods are food deserts, retail badlands, and financial-services wastelands. Businesses that do operate in predominantly black neighborhoods often charge higher prices for items such as gasoline, food, and fees for basic financial services.
Economically, it is in our country's collective best interests to work toward equality on all fronts. There are no easy answers to our country's many systemic problems. No one answer is right for every organization. But finding answers is increasingly an imperative, because continuing to ignore the problems will not make them disappear. This "time" may really be different because, unlike Boomers (raised on an idealized version of what the United States stands for, and how it's supposed to operate), Millennials—and members of Gen Z that follow—hold organizations, companies, and brands accountable for discrimination and unethical behavior. Organizations found to be less than fair will not only be out of favor, but possibly boycotted, and surely subjected to widespread social-media scrutiny. Millennials, and by extension Gen Z, are cynical because:
- They are more ethnically diverse than previous generational cohorts.
- Internet access provides information that reveals the unvarnished truth about what drives political and business leaders—money (beyond profit).
- Having experienced the Great Recession at a relatively young age, and now the pandemic and beginning of the pandemic recession, they see that existing systems are NOT working.
As your company endeavors to grasp the entirety of the current situation and its implications, and to identify which viable options are possible in this socially-charged environment, CFD and SBI are prepared to discuss, support, collaborate, and contribute to the task meaningfully.
Coming soon: Black Households, a mini-presentation by Larry Cohen, director of SBI's Consumer Financial Decisions and the MacroMonitor.
Additional deliverables are available to MacroMonitor subscribers:
- The July Segment Summary: A High-Level Profile of Black Households
- The underlying set of data for this Segment Summary (by request)
For more information, please contact us today!
MacroMonitor Trend Insights Mini-Presentations Now Available
The 2020–21 MacroMonitor will go to field this summer. In addition to providing a comprehensive view of US household finances, the 2020–21 survey is perfectly timed to chronicle how different types of households are coping with their finances during these difficult times.
Meanwhile, CFD's new series of mini-presentations look at consumer reactions to past recessions to provide insights about the likely consumer fallout as our country emerges from the COVID-19 pandemic to a period of economic disruption.
Mini-presentation topics include:
- Outlook for the use of financial advice and advisors in the wake of COVID-19
- Likely impacts of COVID-19 on household debt
- Outlook for retirement and salary-reduction plans following the COVID-19 pandemic
- Trends in life-insurance ownership and opportunities for the industry following the COVID-19 pandemic
- Likely changes in U.S. home ownership following the COVID-19 pandemic
- Discussion of U.S. households' annual financial transactions following the COVID-19 pandemic
- Likely impacts of COVID-19 on U.S. households' risk tolerance