From Recession to Recovery:   The Status and Outlook for EconomicGrowth in the African-American Community
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Homeownership Rates have decreased for alldemographics groups since their peak…                                      1994Q...
…but African-American Homeownership Rates fellsharply during the economic boom period..52.050.048.046.044.042.040.0Source:...
…much before House Price Appreciationbegan to fall…                                       S&P Case Shiller National Price ...
…and much before Subprime ForeclosureRates began to rise…                       Foreclosure Rate - Subprime Loans   AA Hom...
…and before Unemployment Rates for African-Americans began to rise.                              AA Unemployment Rate     ...
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Unemployment Rates of African-Americans remaintwice as high as that of white Americans…                                   ...
…with Employment Growth of African-Americanssuffering greatly during the Great Recession.10.0%     8.0%     6.0%          ...
A major cause of the decline has been the loss of jobsin the manufacturing and construction sectors… 15.0% 10.0%     5.0% ...
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Median Household Income fell significantly for allgroups during the Great Recession…                        10.0%         ...
…however, Median Net Worth declined waslargest for persons of color…                                        2005      2009...
…with the collapse of the housing marketbeing the primary cause of the decline.Median Net Worth of Households with and Wit...
African-Americans and Hispanics are much more  dependent on the housing market for wealth creation.                      W...
However, despite the downturn, wealthconcentration grew within all groups.            Share of Wealth Held by the Wealthie...
So where do we go from here? Wealth creation in the AA community is critically  dependent upon improvement in the labor m...
Thank You.20
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From Recession to Recovery: The Status and Outlook for Economic Growth in the African-American Community

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The National Association of Real Estate Brokers 64th Annual Convention


Presented by:
LaVaughn M. Henry, Ph.D.
Vice President & Sr. Regional Officer
Fed. Reserve Bank of Cleveland
August 7, 2011

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From Recession to Recovery: The Status and Outlook for Economic Growth in the African-American Community

  1. 1. From Recession to Recovery: The Status and Outlook for EconomicGrowth in the African-American Community
  2. 2. 2
  3. 3. 3
  4. 4. Homeownership Rates have decreased for alldemographics groups since their peak… 1994Q1 Peak 2011Q290.080.0 76.2 73.7 69.870.060.0 49.7 50.150.0 44.2 46.6 42.1 40.340.030.020.010.0 0.0 African-American Hispanic WhiteSource: Census Bureau4
  5. 5. …but African-American Homeownership Rates fellsharply during the economic boom period..52.050.048.046.044.042.040.0Source: Census Bureau5
  6. 6. …much before House Price Appreciationbegan to fall… S&P Case Shiller National Price Index AA Homeownership Rate 20.0% 51.00 Correlation Coefficient: 0.34 15.0% 50.00 10.0% 49.00 5.0% 48.00 0.0% 47.00 -5.0% 46.00-10.0% 45.00-15.0% 44.00-20.0% 43.00-25.0% 42.00 2004Q1 2009Q3 1998Q1 1998Q3 1999Q1 1999Q3 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2010Q1 2010Q3Source: S&P Case Shiller, Mortgage Bankers Association6
  7. 7. …and much before Subprime ForeclosureRates began to rise… Foreclosure Rate - Subprime Loans AA Homeownership Rate5.00 51.00 Correlation Coefficient: -0.284.50 50.004.00 49.003.50 48.003.00 47.002.50 46.002.00 45.001.50 44.001.000.50 43.000.00 42.00Source: Mortgage Bankers Association7
  8. 8. …and before Unemployment Rates for African-Americans began to rise. AA Unemployment Rate AA Homeownership Rate18.00 51.00 Correlation Coefficient: -0.3116.00 50.0014.00 49.0012.00 48.0010.00 47.00 8.00 46.00 6.00 45.00 4.00 44.00 2.00 43.00 0.00 42.00Source: S&P Case Shiller, Mortgage Bankers Association8
  9. 9. 9
  10. 10. Unemployment Rates of African-Americans remaintwice as high as that of white Americans… African-American Hispanic White, non-Hispanic 18.00 16.00 14.00 12.00 10.00Rate 8.00 6.00 4.00 2.00 0.00 Nov-00 Dec-02 Nov-05 Dec-07 Nov-10 Apr-01 Sep-01 Oct-03 Mar-04 Apr-06 Sep-06 May-08 Oct-08 Mar-09 Apr-11 Jan-00 Feb-02 May-03 Jan-05 Feb-07 Jan-10 Aug-04 Aug-09 Jul-02 Jun-00 Jun-05 Jul-07 Jun-10Source: : Bureau of Labor Statistics10
  11. 11. …with Employment Growth of African-Americanssuffering greatly during the Great Recession.10.0% 8.0% 6.0% 4.6% 3.7% 4.0% 2.0% 0.0% White -2.0% -1.2% Black -4.0% Hispanic -6.0% -5.7% -8.0%Source: : Bureau of Labor Statistics, Current Population Survey11
  12. 12. A major cause of the decline has been the loss of jobsin the manufacturing and construction sectors… 15.0% 10.0% 5.0% 0.0% Total Nonfarm -5.0% Government-10.0% Construction Manufacturing-15.0%-20.0%-25.0% Dec-03 to Dec- Dec-05 to Dec- Dec-07 to Jun-09 to Jun- 05 07 Jun-09 11 Pre-Bubble Housing Bubble Recession RecoverySource: : Bureau of Labor Statistics, Current Population Survey12
  13. 13. 13
  14. 14. Median Household Income fell significantly for allgroups during the Great Recession… 10.0% 8.0%12-Month %’age Change 6.0% 4.0% 2.0% African-American 0.0% Hispanic White -2.0% -4.0% -6.0%Source: : Census Bureau14
  15. 15. …however, Median Net Worth declined waslargest for persons of color… 2005 2009 $180,000 $168,103 $160,000 $140,000 $134,992 $120,000 $113,149 $100,000 $78,066 $80,000 $60,000 $40,000 $18,359 $12,124 $20,000 $6,325 $5,677 $- Whites Hispanics African-Americans AsiansSource: : PEW Research Center15
  16. 16. …with the collapse of the housing marketbeing the primary cause of the decline.Median Net Worth of Households with and Without Home Equity, 2005 and 2009 Total Excluding Home Equity 2005 2009 Change 2005 2009 ChangeAll $96,894 $70,000 -$26,894 $17,088 $13,566 -$3,522Whites $134,992 $113,149 -$21,843 $32,961 $29,169 -$3,792Hispanics $18,359 $6,325 -$12,034 $3,285 $2,806 -$479African- $12,124 $5,677 -$6,447 $1,676 $1,050 -$626AmericansAsians $168,103 $78,066 -$90,037 $27,137 $20,300 -$6,837 Source: : PEW Research Center16
  17. 17. African-Americans and Hispanics are much more dependent on the housing market for wealth creation. Whites Hispanics African-Americans Asians 2005 2009 2005 2009 2005 2009 2005 2009 Own 44% 38% 65% 55% 59% 56% 50% 35% Home Stocks and 8% 16% 3% 3% 2% 5% 6% 32% Mutual FundsIRA andKEOUGH 9% 10% 3% 6% 5% 6% 6% 6%accounts 401(k)and thrift 11% 12% 8% 11% 12% 14% 10% 10%accountsUnsecured -3% -5% -5% -13% -7% -12% -3% -4%Liabilities Source: : PEW Research Center 17
  18. 18. However, despite the downturn, wealthconcentration grew within all groups. Share of Wealth Held by the Wealthiest 10% of Households, 2005 and 2009 2005 2009 80% 72% Percent of Group Wealth Share 70% 67% 59% 61% 60% 56% 51% 50% 46% 44% 40% 30% 20% 10% 0% Whites Hispanics African-Americans AsiansSource: : PEW Research Center18
  19. 19. So where do we go from here? Wealth creation in the AA community is critically dependent upon improvement in the labor market National unemployment rates are projected to remain high through at least the end of 2012, thwarting significant improvement in the housing market Significant recovery in the AA housing market will require non-traditional approaches to address issues of economic blight, foreclosure, and credit19
  20. 20. Thank You.20

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