Inflation took its toll on black and Hispanic Americans. here’s why

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Related video above: Pessimism about the US economy is deepening, AP-NORC poll finds Many Americans struggle to cope with rising prices for food, gas, housing and other essentials. But inflation has taken an even heavier toll on certain segments of the population. Black and Hispanic Americans have struggled with inflation rates higher than the national average since prices began to soar in March 2021, according to recent analysis from the Federal Reserve Bank of New York. This is a change from the pre-pandemic period when inflation rates for Black and Hispanic Americans were at or slightly below the national average. To determine the different rates of inflation between demographic groups, New York Fed researchers used the Bureau of Labor Statistics Consumer Expenditure Survey to see how different racial and ethnic groups spend their money. They also took into account the price increases of various goods and services. and Asian Americans do, the researchers found. Prices for most products have jumped in recent months due to pandemic-related supply chain constraints and fallout from Russia’s invasion of Ukraine. Inflation is rising at its fastest pace in 40 years. The annual inflation rate for the major consumer categories surveyed by the New York Fed was 9.2% in May, slightly higher than the 8.6% of the consumer price index generally used. However, when adjusted for spending levels, the inflation rate for Hispanic Americans was about 0.6 percentage points higher than the overall rate constructed by the researchers. For black Americans, it was about 0.2 percentage points higher. The rate for white Americans was very close to the headline rate constructed by the Fed, while for Asian Americans it was about 0.5 percentage points lower. Notably, these gaps are more than twice as high. as important as they were in 2019, although at that time Black and Hispanic Americans saw inflation slightly lower than the national average and Asian Americans slightly more. to researchers. Different groups likely pay different prices for the same items, and Black and Hispanic Americans likely face higher price growth. Jobs is another 2020 story, according to earlier analysis by the New York Fed. This study focused on the employment-to-population ratio, which looks at the share of those in work out of the total number of people, for the age group 25-54. When COVID-19 first upended the economy, black and Hispanic Americans lost their jobs in greater numbers. This widened the employment rate gap to 6 percentage points or more for both groups, compared to the average American. By contrast, in February 2020, the gap was 4.4 percentage points for Black Americans and 2.3 percentage points for Hispanic Americans, according to the analysis. But in May 2022, the gap for black Americans was 3.3 percentage points, lower than before the pandemic. For Hispanic Americans, the differential was 2.6 percentage points, just above its pre-pandemic spread. This contrasts with the labor market recovery after the Great Recession. Employment rates have taken nearly a decade to return to their pre-recession peak, both on average and for black and Hispanic Americans. But the labor market was very tight, which made it easier for many people to find a job.

Related video above: Pessimism about the US economy is deepening, AP-NORC poll finds

Many Americans are struggling to cope with rising prices for food, gasoline, housing and other essentials. But inflation has taken an even heavier toll on some segments of the population.

According to a recent analysis of Federal Reserve Bank of New York. This is a change from the pre-pandemic period when inflation rates for Black and Hispanic Americans were at or slightly below the national average.

To determine the different rates of inflation across demographic groups, New York Fed researchers used data from the Bureau of Labor Statistics Consumer Expenditure Survey to see how different racial and ethnic groups spend their money. They also took into account the price increases of different goods and services.

For example, Hispanics and Black Americans spend relatively more on transportation — including gasoline and used cars, the two categories where prices have skyrocketed — and relatively less on entertainment and health care than Americans. White and Asian Americans, the researchers found.

Prices of most goods surged in recent months due to pandemic-related supply chain constraints and fallout from the Russian invasion of Ukraine. Inflation is rising at its fastest pace in 40 years.

The annual inflation rate for major consumer categories, the New York Fed looked at 9.2% in May, slightly higher than the 8.6% reading for the consumer price index that is generally used.

However, when adjusted for spending levels, the inflation rate for Hispanic Americans was about 0.6 percentage points higher than the overall rate constructed by the researchers. For black Americans, it was about 0.2 percentage points higher.

The rate for white Americans was very close to the headline rate constructed by the Fed, while for Asian Americans it was about 0.5 percentage points lower.

In particular, these differences are greater than twice as much as in 2019, although at that time Black and Hispanic Americans saw inflation slightly lower than the national average and Asian Americans slightly more.

The current disparities in inflation between different demographic groups are, however, probably even larger than the analysis found, according to the researchers. Different groups likely pay different prices for the same items, and Black and Hispanic Americans likely face higher price growth.

Employment is another story

Black and Hispanic Americans fared better in recovering jobs from the pandemic-fueled economic downturn in spring 2020, a earlier analysis by the New York Fed found.

This study looked at the employment-to-population ratio, which looks at the share of those in work out of the total number of people, for the age group 25-54.

When COVID-19 first upended the economy, black and Hispanic Americans lost their jobs in greater numbers. This widened the employment rate gap to 6 percentage points or more for both groups, compared to the average American.

By contrast, in February 2020, the gap was 4.4 percentage points for Black Americans and 2.3 percentage points for Hispanic Americans, according to the analysis.

But in May 2022, the gap for black Americans was 3.3 percentage points, lower than before the pandemic. For Hispanic Americans, the differential was 2.6 percentage points, just above its pre-pandemic spread.

This contrasts with the labor market recovery after the Great Recession. Employment rates have taken nearly a decade to return to their pre-recession peak, both on average and for black and Hispanic Americans.

Researchers have not looked into why the employment rate gap has narrowed so rapidly in the current recovery. But the labor market was very tight, which made it easier for many people to find a job.

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