Beginning in the last half of 2007, mounting foreclosures began to cause instability in the complex structure of credit that funded most of the mortgages in the U.S. It is estimated that 20% of home loans funded from 1998 to 2006 ended in foreclosure.
By 2008, the mortgage market was in freefall and, without customers to buy homes, the prices of existing houses plummeted.
Without the cushion of home equity to protect them, American families began to cut back on spending dramatically deleveraging themselves by either paying off or defaulting on their debts. Unemployment began to creep up and then skyrocketed. More likely to be impacted by a foreclosure, communities of color also suffered the most as unemployment hit the service and public sectors the hardest, both job sectors which traditionally employs high numbers of minorities and women. By 2009, white families in America had lost 16% of their net worth on average, while black and Hispanic families had lost 53% and 66%, respectively. Some studies place the current ratio of wealth between black and white families as high as 30 to 1.
With all the economic conversations around rebuilding our economy, there is little mention about how the nation will tackle racial economic inequality. High poverty and unemployment and low home ownership and wealth in the African American community are all related to grave institutional economic challenges African American communities have faced since slavery. And while this country has made considerable gains in dealing with racial inequities; we still remain far from achieving economic justice for all.
Poverty, unemployment, homeownership, wealth – for each of these economic indicators African Americans fare worse than other racial groups. But why? During Black History Month the NAACP will delve into 4 major U.S. periods (Slavery, the New Deal, the Reagan Era, and the 2008 Housing Crisis) that have shaped many of African Americans’ economic realities. These stories are not of victimization – African Americans have triumphed and excelled despite centuries of exclusion and oppression. By providing this historic framework, we hope there will be more appreciation for African Americans’ economic contributions to this country; greater understanding of the grave institutional economic challenges facing African American communities; and support for policies to remedy racial economic inequities in acknowledgement that helping the minority will ultimately help the majority.