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Our economists offer strategies on building your enterprise, increasing your earning power, and protecting your portfolio in a volatile market The New Rules for Wealth Building The rules for wealth building changed in 2001. In the aftermath of the tech wreck, it became clear that investors could no longer throw their cash into a high-flying stock and count the returns. High inventory levels at the big manufacturers led to a series of earnings disappointments from corporate America’s giants, proving that even ‘tried- and-true’ old economy stalwarts could stumble. Then the U.S. plunged into recession in March 2001 prompting the Federal Reserve to cut interest rates an unheard of 11 times before year-end. Through it all, consumer spending was the one bright spot in the economic picture — that is until Sept. 11.
The terrorist attacks, which sent ripples throughout the economy, initially impacting the airline, lodging, and tourism industries, eventually sent waves throughout every sector, temporarily slowing down consumer spending and eliminating virtually all signs of an economic recovery at that time. Amid rising unemployment and concerns about national security, Republicans and Democrats bickered over terms of a stimulus bill designed to jump-start the economy.
To discuss these and other matters, the BLACK ENTERPRISE Board of Economists (the Board) met at the New York offices of Earl G. Graves Publishing Co. Inc. (E.G.G.) to discuss issues raised by readers and BE editors. Led by E.G.G. Publishing President and Chief Operating Officer Earl Graves Jr., the Board members participating in this session included Dr. Andrew Brimmer of Brimmer & Associates in Washington, D.C.; Dr. Thomas D. Boston of the Ivan Allen College, School of Economics at the Georgia Institute of Technology in Atlanta; Dr. Margaret Simms, director of research for the Joint Center of Political and Economic Studies in Washington, D.C.; Dr. Cecilia Conrad of Pomona College in Claremont, California; Dr. Darrell Williams of Economic Analysis, L.L.C. in Los Angeles; and National Urban League Research and Public Policy Director William Spriggs.
As was the case last year, we turned to our readers for their input, sending out a call for questions via blackenterprise.com. Inundated with responses from readers, BE editors then had the challenge of narrowing the queries down to five.
Nearly all the questions revolved around three areas: the investment climate and how African American portfolios and other investments were affected in 2001, and what they can expect looking ahead; the employment climate and when the jobless rate will begin to decline; and the post-Sept. 11 business climate. Here’s what you — our readers — wanted to know, and what the BE economists had to say.
“I am 24 years old and wanted to invest, possibly in mutual funds or diverse stocks. How do you feel about investing at this time?” — M. Ashe, Rego Park, New York
Many African Americans have approached investing with trepidation since the end of the bull market of the late ’90s; investing is a long-term, lifelong commitment and the days of “quick-hit” investing have gone the way of the dinosaur and the daytrader.