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Will African-Americans remain optimistic about 2017 despite Trump election victory?

(November 8, 2016) In an ironic bit of timing, a study by a research firm was released on Election Day -- in which Donald Trump would ultimately become President-elect of the United States -- that showed African-Americans are the most optimistic of consumers looking forward to 2017. The findings were offered in the following release issued by Packaged Facts:

Despite the economic and social challenges, African-Americans remain among the most optimistic consumer groups in the American economy. "African-Americans: Demographic and Consumer Spending Trends," a recent report by market research firm Packaged Facts, found that nearly half (47%) of African-Americans think they will be better off financially 12 months from now, compared to just 37% of other Americans Affluent blacks hold especially strong convictions about how their financial future will unfold, though the abiding optimism of African-Americans transcends income levels.

The reasons for the steadfast confidence of African-American consumers are many and complex.  To begin, despite the growing chasm between the very rich and the rest of American society, there are strong empirical reasons for African-Americans to believe that upward mobility remains achievable for them.  As highlighted in the Packaged Facts report, key social and economic indicators point to a significant increase in the number of middle- and higher-income African-Americans over the past decade. 

During this period, the number of African-American households with an income of $100,000 or more jumped 83%, while the number of African-Americans employed in management and professional occupations grew from 3.8 million to 4.8 million, an increase of 26%.  There are now nearly two million blacks who earn at least $75,000 annually.

The confidence of black consumers may also stem from the "Obama effect," a phenomenon that among other things sparked renewed optimism among African-Americans based on their pride in the election of the country's first black president.  A Packaged Facts analysis of trends in the consumer confidence index of Simmons National Consumer Study data has found a factual basis for this hypothesis. 

In 2007 blacks were less likely than other Americans to be ranked as "highly confident" consumers (20% vs. 25%).  By 2009, the year after the election of President Obama, the positions of each segment had reversed, as 26% of blacks and just 17% of other Americans were classified as "highly confident" consumers.  By 2013, following the re-election of President Obama, 42% of black consumers were rated as "highly confident" compared to just 28% of other American consumers.

More recent trends suggest that the Obama effect may in fact have been in play in recent years, at least when it came to boosting the optimism of black consumers.  The proportion of African-American consumers categorized as "highly confident" fell from 42% in 2014 to 38% in 2015 and 31% in 2016.  Nevertheless, as the Obama administration nears its end, African-Americans remain more likely than other consumers to have a high degree of consumer confidence (31% vs. 27%).

The most powerful factor driving the optimism of black consumers and the relative pessimism of white consumers may lie in their family backgrounds, which in turn are partly the product of history and generational experiences.  Research shows that consumers who perceive that they are better off than their parents feel more positive about their economic circumstances today and more optimistic about their prospects in the future. 

Johns Hopkins University researcher Andrew Cherlin has found that poor and middle-class blacks have a higher likelihood of comparing themselves to parents who are worse off than they are, whereas working-class whites -- whose fathers may have enjoyed high-paying blue-collar jobs a generation ago -- are more likely to perceive that their parents were better off than they are.  These different reference points make black consumers feel better off, and cause their white counterparts to feel worse off, than their parents.

Methodology

The primary source of consumer data in this report is the Simmons National Consumer Study (NCS) for Winter 2015/2016, which was fielded between February and March 2016. The report uses the Spring 2006 NCS for trend analysis tables. On an ongoing basis, Simmons conducts booklet-based surveys of a large and random sample of consumers (approximately 25,000 for each 12-month survey compilation) who in aggregate represent a statistically accurate cross-section of the U.S. population.

U.S. Government sources include data from the Consumer Expenditure Survey (CES) of the Bureau of Labor Statistics (BLS). The CES tracks expenditures of “consumer units,” which are equivalent to Census Bureau “households.” This Packaged Facts report uses the term “households” for the sake of consistency. The report compares consumer expenditure patterns in the CES covering the 12-month period from mid-2014 through mid-2015 with those in the survey covering the 12-month period ending in mid-2012.

The primary Census Bureau source used in this report is the American Community Survey (ACS). Data from ACS date back to 2005. The latest available ACS data cover 2014. Census Bureau population estimates and projections as well as data from the Current Population Survey are also used where appropriate.

For more information visit: http://www.packagedfacts.com.


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