Make us your home page
Instagram

PunditFact: Can't compare black America's buying power to countries' GDP

The statement

"If black America were a country, it'd be the 15th-wealthiest nation in the world."

Larry Elder, conservative commentator, Aug. 20 on CNN

The ruling

Out of 196 countries, 15th-wealthiest? Sounds impressive and worth checking out.

Elder referred us to an annual report by Target Market News called "The Buying Power of Black America," which publishes the only estimate we could find of the total earned income of African-Americans. In 2011, the report he provided us, Target Market News put the income spent by African-Americans at $836 billion.

Elder got his talking point by comparing that figure to the World Bank's list of each country's Gross Domestic Product (GDP), which is the monetary value of all the finished goods and services produced.

In 2011, "black America's" $836 billion would have put it in 16th, above Indonesia and below South Korea. (The Target Market News report is behind a paywall, so we can't see precisely how it reached its figure. We asked if Target Market News would provide us a copy, but we didn't hear back.)

Target Market News hasn't published another estimate on African-Americans' earned income since 2011, but a 2013 report by the Selig Center for Economic Growth pegs the contribution to the market at $1 trillion. That would also rank 16th — above Indonesia and below Mexico.

Case closed?

Not really. Experts told us that there are two major problems with Elder's methodology.

First, earned income and GDP aren't quite the same thing. Comparing them isn't fair, said NYU economics professor Gian Luca Clementi, "because GDP is a concept that applies to a jurisdiction, not a group of people living in a jurisdiction." GDP is "a measure of the total income produced in a country," Clementi said, and factors like government expenditure and private investment mean that buying power and GDP aren't comparable.

Second, Clementi said, "a country's total GDP only gives a measure of the total income produced in the country. Anyone having the ambition of using GDP as a measure of average economic well-being should start dividing by the number of residents."

Clementi used China as an example to better explain. While China has the world's second-highest GDP, "its inhabitants are still a lot poorer than any Western country's residents."

We took Clementi's suggestion and divided the most recent estimate of black earned income, $1 trillion, by the Census Bureau estimate of 44.5 million African-Americans. That would create a per-capita buying power of about $23,000 a year, which would translate to about 34th around the world on the International Monetary Fund's list of countries by GDP per capita (between the Bahamas and Malta).

But $23,000 doesn't go as far in the United States as, say, in Lithuania. Economists multiply GDP per capita by a conversion factor called purchasing power parity to account for the different values of goods and services in different countries. If you apply these factors, the African-American population's $23,000 a year ranks 44th (between Portugal and Lithuania).

The United States as a whole, for comparison, ranks seventh.

We rate this claim False.

Derek Tsang, Times staff writer

Edited for print. Read the full version at PundiFact.com.

PunditFact: Can't compare black America's buying power to countries' GDP 09/12/14 [Last modified: Friday, September 12, 2014 6:24pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Carrollwood fitness center employs scientific protocol to help clients

    Business

    In 2005, Al Roach and Virginia Phillips, husband and wife, opened 20 Minutes to Fitness in Lakewood Ranch, and last month they opened the doors to their new location in Carrollwood.

    Preston Fisher, a personal fitness coach at 20 Minutes To Fitness, stands with an iPad while general manager/owner Angela Begin conducts an equipment demonstration. The iPad is used to track each client's information and progress. I also included one shot of just the equipment. The center recently opened in Carrollwood. Photo by Danielle Hauser.
  2. Olive Tree branches out to Wesley Chapel

    Business

    WESLEY CHAPEL — When it came time to open a second location of The Olive Tree, owners John and Donna Woelfel, decided that Wesley Chapel was the perfect place.

    The Olive Tree expands its offerings of "ultra premium?€ extra virgin olive oils (EVOO) to a second location in Wesley Chapel. Photo by Danielle Hauser.
  3. Massachusetts firm buys Tampa's Element apartment tower

    Real Estate

    TAMPA — Downtown Tampa's Element apartment tower sold this week to a Massachusetts-based real estate investment company that plans to upgrade the skyscraper's amenities and operate it long-term as a rental community.

    The Element apartment high-rise at 808 N Franklin St. in downtown Tampa has been sold to a Northland Investment Corp., a Massachusetts-based real estate investment company. JIM DAMASKE  |  Times
  4. New York town approves Legoland proposal

    News

    GOSHEN, N.Y. — New York is one step closer to a Lego dreamland. Goshen, a small town about fifty miles northwest of the Big Apple, has approved the site plan for a $500 million Legoland amusement park.

    A small New York town, Goshen approved the site plan for a $500 million Legoland amusement park. Legoland Florida is in Winter Haven. [Times file  photo]
  5. Jordan Park to get $20 million makeover and new senior housing

    Real Estate

    By WAVENEY ANN MOORE

    Times Staff Writer

    ST. PETERSBURG —The St. Petersburg Housing Authority, which bought back the troubled Jordan Park public housing complex this year, plans to spend about $20 million to improve the 237-unit property and construct a new three-story building for …

    Jordan Park, the historic public housing complex, is back in the hands of the St. Petersburg Housing Authority. The agency is working to improve the 237-unit complex. But the latest plan to build a new three-story building for seniors will mean 31 families have to find new homes. [LARA CERRI   |   Tampa Bay Times]