Achieving Growth in a Slowly Reviving Economy: The B.E. Economists Focus on Measures to Create a Broader Economic Base
McCoy, Frank, Black Enterprise
The recession has been over for more than six months. At least that's what the economic pundits say. So why aren't you making more money, consuming more goods or feeling more financially secure?
There are manifold reasons for doubt and wariness. They include: a federal deficit of more than $282 billion; a projected average economic growth rate of less than 3% per annum through 1995; stagnant consumer spending; the loss of 1.6 million jobs (600,000 from the management/professional ranks) since July 1990; and an estimated 1.1. million out-of-work individuals who are no longer even looking for jobs.
The bad news doesn't stop here. The United States moved only reluctantly from the go-go 1980s to the slow-slow 1990s: Now states, municipalities, businesses and consumers--all of whom helped to build the public and private debt bomb--are afraid to borrow and they face lenders who are afraid to lend. Last decade's buy-now, pay-later fiscal policy has contributed to an estimated 800,000 consumer bankruptcies per year. And unlike other recessions since World War II, the 1980s' burgeoning deficits and growth-at-any-cost philosophy have created problems that cannot be attacked with the traditional, now fiscally suicidal antidotes of government spending and tax reductions.
Not all the economic news is awful, however. In fact, some points of light include: inflation's descent to a projected 4.3% for 1991; the continued expansion of service jobs in selected industries; manufacturing's upswing for more than six months; the increased affordability of homes (except in the Northeast and on the West Coast); the extraordinary drop in mortgage interest rates; and the steadiness of exports, thanks to a weak dollar.
Last September, the BLACK ENTERPRISE Board of Economists convened in Washington, D.C. Over two days, the economists discussed and debated the nascent recovery and other issues, such as education's role in determining employment and income; the regional impact of the rolling recovery; the challenges facing African-American mayors and the prospects for economic development of Third World nations. Board members Andrew F. Brimmer, David H. Swinton, Marcus Alexis and Courtney N. blackman presented reports at the meeting, while board members Bernard E. Anderson, Edward D. Irons, Gerald D. Jaynes, Emmett J. Rice and Earl G. Graves participated as discussants. (Due to a scheduling conflict, board member Margaret C. Simms, deputy director of research for the Washington, D.C.-based Joint Center for Economic and Political Studies, was unable to participate.) The climate facing African-Americans was summed up by BE Publisher and Editor Graves: "As 1992 approaches, we will face the emergence of a single European market; major mergers of money centers and the emergence of national banks; and the growing belief that continued layoffs and international market instability may lead to a short-lived recovery."
A Bumpy Road To Recovery
During the first day's discussion, Andrew F. Brimmer, president of Brimmer & Co. Inc., a Washington, D.C.-based economic consulting firm, made what some American businessowners and new unemployed professionals might characterize as a classic economic understatement. "The recession ([defined as at least two consecutive quarters of declining growth in gross national product]) which began in the summer of 1990 had run its course by the end of last sprint," he said. "However no sharp rebound in economic activity should be expected."
Moreover, the growth Brimmer projects in the first nine months of 1992 will occur at a decelerating pace. During the first three quarters, the gross national product (the total value of goods and services produced or GNP) will grow a mediocre 3.1%, 2.9% and 1.9% respectively. In the final quarter, he projects a GNP rate of 2% and a year average of 2.5%. Those figures appear somewhat robust, when compared to the -0. …