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It is a grim fact of American life that black people have long lagged well behind white folk in the world of work, with higher unemployment, lower wages and a larger share giving up on job searches altogether. A much more hopeful fact is that many of these inequalities now appear to be shrinking. In the half-century before the covid-19 pandemic, the black unemployment rate was on average twice as high as the white one. At the end of last year jobless rates were, respectively, 5.2% for black Americans and 3.7% for white people—equalling the narrowest gap on record.
Image: The Economist
Even more striking are shifting tides in labour-force participation. About 63% of black Americans are now deemed to be either in work or searching for jobs, more than the 62% level for white Americans—an inversion of the pattern seen in previous decades. In part this reflects demographic differences, because the median white American is about a decade older than the median black American and thus more likely to be retired. But it also testifies to better job prospects for black Americans: their median earnings were about 84% of those of white Americans at the end of 2023, a sharp rise from the 79% average of the preceding two decades.
The underlying cause of all of these changes is America’s run of economic strength. The labour market has been so tight for the past couple of years that it has benefited all workers but especially the most marginalised, helping to create opportunities that were once much harder to come by. Although it is only natural to worry whether these advances will endure when growth eventually slows, it is important to recognise that, for the moment, they are reducing some of America’s most persistent inequalities.
The improvement for black Americans has been broad-based, with gains for blue-collar and white-collar workers alike. Eddie Smith in Charlotte, North Carolina was struggling to get by with occasional jobs mixing concrete until last summer, when he took a four-week course to obtain his commercial driver’s licence. Now he pilots an 18-wheeler and delivers crates of beer around the city for a base salary of about $60,000. “It’s the best job I’ve ever had. The pay is good, and I work at my own pace on my own schedule,” he says. He is not alone. According to official data, the economy has added about 1.6m jobs in “transportation and material moving”—a category which includes driving delivery trucks—since the end of 2019, and about 20% of these have gone to black Americans, above their 14% share of the population.
Image: The Economist
At the opposite end of the labour market is Lloyd Bolodeoku, a senior in computer science at Bowie State University, one of America’s historically black universities. He has already accepted a job offer from Adobe, a software company, and will start in a cyber-security role in May, mere days after he graduates. Mr Bolodeoku recalls the words of a teacher from his high school just outside Baltimore, where the student body was more than 90% black: “His saying was you either want the router or you want the spatula.” That is, if you do not learn about technology, you may end up flipping burgers. Although black Americans are still underrepresented in high-tech work, they have gained about 130,000 jobs in computer-related occupations in the past three years.
One reason that a strong labour market is valuable for black Americans is that many work in highly cyclical sectors such as freight delivery. That makes them vulnerable to recessions but also well placed during periods of growth (a similar dynamic exists for Hispanics). A tight labour market also blunts some of the discrimination that black applicants may face when looking for jobs. “During cyclical downturns employers can afford to pick and choose, but when workers are really needed, they are penalised for their biases,” says Michelle Holder, an economist at John Jay College, City University of New York.
The evolution of America’s economic structure is probably also playing a role. Concentrated in lower-skill jobs, black men were hit especially hard by the decline of factories and unions from the 1970s on. But lower-skilled workers are once again in high demand in a range of occupations that are increasingly central to the economy, from stocking warehouses to assisting nurses. Real-wage growth for the bottom 10% of earners has consistently outstripped all others since 2020—a boon for black Americans.
Another factor is a decline in incarceration. About 590,000 black adults were in prison in 2021, down by more than a quarter from a decade earlier. Black Americans are still nearly five times more likely than white ones to go to jail, but a lower incarceration rate is progress nonetheless, freeing more people for work.
Sam Schaeffer, head of the Centre for Employment Opportunities, which helps Americans find work after leaving prison, has also seen increased openness to “second-chance hiring” by companies. He says that stems in part from executives making commitments to racial justice but also, crucially, from the tight labour market. One of his organisation’s success stories is Mr Smith, the beer-delivery man in Charlotte. He was behind bars for 34 years before getting parole. Many firms were afraid to hire someone with his background, but thankfully not all. “It’s just hard for them to find drivers these days,” he says.
A strong labour market is, by itself, far from a cure-all for racial inequality. Although the black-white wage gap has narrowed in the past two years, the wealth gap has widened over the same period, because white Americans own more stocks than black Americans and so have benefited more from the market rally.
What’s more, unfairness goes well beyond hiring decisions. For decades the received wisdom was that black Americans would pull closer to white Americans if they had similar academic qualifications. But Valerie Wilson of the Economic Policy Institute, a think-tank based in Washington, DC, has shown that wages for black and white college graduates have instead drifted further apart in recent decades. “In addition to pay discrimination, a lot has to do with disparities in the jobs that people go into and in opportunities for promotion,” says Ms Wilson.
One question is whether historically black colleges, which produce about 40% of America’s black engineers, can help reverse this dismal trend for graduates. The computer-science department at Bowie State, where Mr Bolodeoku is finishing his degree, has built up an internship-placement programme that links students with companies and government agencies, starting in their first year and continuing throughout their studies. “They get to be mentored and get the confidence they need,” says Rose Shumba, chair of Bowie’s computer-science department. Not coincidentally, its enrolment has more than doubled from 190 in 2019 to about 500 today.
For black women more generally, investment in early education would be even more significant. A big stumbling block for their careers is the need to raise young children. Nearly 50% of black children live only with their mothers, compared with less than 20% of white children. That is one of the motivations for the Biden administration’s proposal to subsidise child care and make pre-kindergarten free, a policy which would need a Democratic sweep in the election later this year to get through Congress. “You would get a return on investment both in terms of lifting kids out of poverty and freeing up their parents to be able to pursue more opportunities,” says Lael Brainard, director of the National Economic Council in the White House.
For now, the test of whether black Americans are truly faring better in the workplace will arise whenever the economy next hits a soft patch. Historically, many have fallen prey to a “last hired, first fired” mode of employment. But William Rodgers of the Federal Reserve’s branch in St Louis is cautiously optimistic that a future downturn may play out differently. He has homed in on some of the workers most likely to be fired—young black Americans with no college degrees—and found that their unemployment rate has barely risen since 2022 even as the number of job openings has fallen. This, he thinks, may be a sign that gains of the past few years are sustainable. “People have come in, gotten a toehold and built up experience,” he says. With any luck, more black Americans will go from last hired to lastingly hired.■
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Guests and attendeess mingle and walk through the atrium during the IMF/World Bank Group Spring Meetings at the IMF headquarters in Washington, DC, on April 24, 2025.
Jim Watson | Afp | Getty Images
After years dominated by the pandemic, supply chains, energy and inflation, there was a new topic topping the agenda at the World Bank and International Monetary Fund’s Spring Meetings this year: tariffs.
The IMF set the tone by kicking off the week with the release of its latest economic forecasts, which cut growth outlooks for the U.S., U.K. and many Asian countries. While economists, central bankers and politicians have been engaged in panels and behind-the-scenes talks, many are attempting to work out whether trade tensions between China and the U.S. are — or perhaps are not — cooling.
These were some of the main messages from ECB members this week.
Christine Lagarde, European Central Bank president
On inflation and monetary policy:
“We’re heading towards our [inflation] target in the course of 2025, so that disinflationary process is so much on track that we are nearing completion. But we have the shocks, you know, and the shocks will be a dampen on GDP. It’s a negative shock to demand.”
“The net impact on inflation will depend on what countermeasures are eventually taken by Europe. Then we have to take into account the [German] fiscal push by the defense investments, by the infrastructure fund.”
“We have seen successive movements, you know, announcement [of U.S. tariffs], and then a pause, and then some exemptions. So we have to be very attentive… Either we cut, either we pause, but we will be data dependent to the extreme.”
On market moves:
“When we had done our projections, we anticipated that… the dollar would appreciate, the euro would depreciate. It’s not what we saw. And there have been some counter-intuitive movements in various categories.”
“The German market has obviously been shocked in a positive way by the program soon to be put in place by the German government, with a commitment to defense, with a commitment to a big fund for infrastructure development.”
Klaas Knot, The Netherlands Bank president
On tariff uncertainty:
“If I look back over the last 14 years, in the initial days of the pandemic I think that was comparable uncertainty to what we have now.”
“In the short run, it’s crystal clear that the uncertainty that is created by the unpredictability of the tariff actions by the U.S. government works as a strong negative factor for growth. Basically, uncertainty is like a tax without revenue.”
On the inflation impact:
“In the short run, we will have lower growth. We will probably also have lower inflation. As we also see, the euro is appreciating as energy prices have also come down. So together with the sort of negative factor uncertainty in the short run, it’s crystal clear that it will accelerate the disinflation.”
“But in the medium term, the inflation outlook is not all that clear. I think there are still these negative factors. But in the medium term, you might get retaliation. You might get the disruption of global value chains, which might also be inflationary in other parts of the world than the U.S. only. And then, of course, we have the fiscal policy coming in in Europe. So this is actually a time in which you need projections.”
On a June rate cut and market pricing for two more ECB rate cuts in 2025:
“I’m fully open minded. I think it’s way too early to already take a position on June, whether it would be another cut. It will fully depend on these projections.”
“I would need to see a more structured analysis of the impact on the inflation profile ahead of us, and only then can I say whether the market is pricing fair or whether I don’t.”
Robert Holzmann, Austrian National Bank governor
On the need to wait for more data and news on tariffs:
“We have not seen this uncertainty now for years… unless the uncertainty subsides, by the right decisions, we will have to hold back a number of our decisions, and hence, we don’t know yet in what direction monetary policy should be best moved.”
“Before looking at data in detail, the question is, what kind of political decisions will be taken? Is it that we will have some tariff increases? Is it that we will have strong tariff increases? Is it that we will have retribution by high counter tariffs?”
On the ECB’s April rate cut:
“I think there’s a broad consensus [on rates]. But of course, at the margin, people differ.”
“My assessment is that at this time, it wasn’t clear yet to what extent [tariff] countermeasures were being taken. Because with countermeasures in Europe, prices may have increased. Without countermeasures, quite likely the price pressure is downward. And for the time being, we don’t know yet the direction.”
On the direction of interest rates:
“I think if the recent noises about an arrangement [on trade] were to be true, in this case, quite likely it is more towards the downside than the upside with regard to prices. But this can be changed with different decisions and the result of which, we may even imagine in [the] other direction. For the time being, no, it will be down.”
“There may be further cuts this year, but the number is still outstanding.”
Mārtiņš Kazāks, Bank of Latvia governor
On opportunity from tariffs:
“With all this uncertainty and vulnerability, this is also the time of opportunities for Europe.”
“It’s a time for Europe to grasp all the aspects of being an economic superpower and becoming a really fully-fledged political and geopolitical superpower, and this requires doing all the decisions that in the past, were not carried out fully.”
“This requires political will, political guts to make those decisions, and to strengthen the European economy and assert its place in a global world.”
On market reaction to tariffs:
“So far it seems to be relatively orderly … but if one looks at the spillovers to Europe, the financial markets are working more or less fine, we haven’t seen spreads exploding or anything like that.”
“But in terms, however, of the macro scenarios, this uncertainty is extremely elevated in the sense that, given the possible outcomes, the multiple scenarios and their probabilities are very similar with the baseline [tariff] scenario.”
US President Donald Trump speaks during a bilateral meeting with Prime Minister of Norway Jonas Gahr Store in the Oval Office of the White House in Washington, DC, on April 24, 2025.
Saul Loeb | Afp | Getty Images
President Donald Trump denied that an aggressive bond market sell-off influenced his decision earlier this month to hold off on aggressive “reciprocal” tariffs against U.S. trading partners.
“I wasn’t worried,” Trump said in a Time magazine interview during which he was asked about financial market tumult after his April 2 “liberation day” announcement.
In the decree, Trump slapped 10% across-the-board duties against all U.S. imports and released list of tariffs against dozens of other nations. The extra levies were based on trade deficits the U.S. had against the respective countries and raised fears about inflation, a potential recession and disruption of long-held trade agreements.
Markets recoiled following the release. Treasury yields initially headed lower but quickly snapped higher. The 10-year yield rose half a percentage point in just a few days, one of its quickest moves ever, as investors also ditched stocks and the U.S. dollar.
Ultimately, Trump issued a 90-day stay on the reciprocal tariffs to allow time for negotiation. But he said it wasn’t because of the market tumult.
“No, it wasn’t for that reason,” Trump told Time in the interview from Tuesday that was published Friday. “I’m doing that until we come up with the numbers that I want to come up with. I’ve met with a lot of countries. I’ve talked on the telephone. I don’t even want them to come in.”
Yields have since moved lower, with the 10-year most recently around 4.28%, about a quarter percentage point higher than its recent low. Trump had said when he made the decision to hold off that the bond market had gotten the “yips.”
“The bond market was getting the yips, but I wasn’t. Because I know what we have,” he said. “I know what we have, but I also know we won’t have it for long if we allowed four more years of the gross incompetence. This thing was just running — it was running as a free spirit. This was — this was the most incompetent president in history.”
Though negotiations over tariffs are ongoing, Trump added that he would consider it a “total victory” even if the U.S. has levies as high as 50% still in place a year from now.
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The Bank of England is focused on the potential impact of U.S. tariffs on U.K. economic growth if there is a slowdown in global trade, the central bank’s governor Andrew Bailey said Thursday.
“We’re certainly quite focused on the growth shock,” Bailey told CNBC’s Sara Eisen in an interview at the IMF-World Bank Spring Meetings.
Going into its May 8 monetary policy meeting, the central bank will consider “arguments on both sides” around the impact of tariffs on growth and domestic supply constraints on inflation, Bailey said.
“There is clearly a growth issue we start with, with weak growth … but a big question mark is how much of that is caused by the weak demand, how much of it is caused by a weak supply side,” he continued.
“Because the weak supply side, of course, unfortunately, has the sort of the upside effect on inflation. So we’ve got to balance those two. But I think the trade issue is now the new part of that story.”
Inflation could be pulled in either direction by wider forces, with a redirection of trade exports into other markets being disinflationary, but a retaliation on U.S. tariffs by the U.K. government — which he stressed did not appear likely — pushing up inflation.
Bailey added that he did not see the U.K. as being close to a recession at present, but that it was clear economic uncertainty was weighing on business and consumer confidence.
IMF downgrade
The IMF earlier this week downgraded its 2025 growth forecast for the U.K. to 1.1% from 1.6%, citing the impact of U.S. President Donald Trump’s trade tariffs, higher borrowing costs and increased energy prices.
However, economic forecasting remains mired in uncertainty as countries engage in negotiations with U.S. officials over Trump’s swingeing universal tariff policy, currently on pause. The U.S. has imposed 25% tariffs on steel, aluminum and autos and a 10% levy on other British exports.
U.K. policymakers have expressed hopes of reaching a trade deal with the White House, with U.S. Vice President J. D. Vance saying there is a “good chance” of an agreement.
Bailey told CNBC on Thursday that he would be “very encouraged if the U.K. does make a deal,” but that its economy was very open and services-oriented, so it would still be impacted by a wider slowdown in growth or trade.
He also noted that inflation would increase from the current 2.6% in the coming readings due to effects from markets such as energy prices and water bills, but that the bump up would be “nothing like what we saw a few years ago.”
The Bank of England held interest rates at 4.5% at its March meeting, before Trump shocked the world with the scale of his tariff announcement.
Markets now see the BOE slashing rates to 4% by its August meeting.