Labor market conditions for Black Americans are worsening more rapidly than they are for the overall population.

• It's a reversal from just a short time ago, when strong jobs growth meant that Black-white employment gaps were among the smallest on record.

Why it matters: The more dismal labor market outcomes are in step with previous slowdowns, when weaker hiring affected marginalized groups first.

• Unemployment among young adults of all races has also soared, for example.
• But new factors that are specific to this economic cycle — like shrinking government employment — add to the pressure.

By the numbers: The overall unemployment rate has risen 0.5 percentage point this year, hitting 4.6% in November.

• Over the same period, the jobless rate for Black Americans has jumped by 2.2 percentage points, to 8.3% — up from the record low rate of 4.8% seen in the spring of 2023.

Zoom in: The Black unemployment rate has been higher than the overall population since at least the early 1970s, when the government started tracking it.

• But the rates had begun to converge, before blowing out again in recent months. One key reason: shrinking federal employment. DOGE-affected workers fell off payrolls in October.

What they're saying: "The federal government has always been a place where Black people have been able to find employment — quality jobs, benefits, things like that," says Gbenga Ajilore, chief economist at the Center on Budget and Policy Priorities.

• "There's just been this kind of push toward reducing the federal government through all different means," Ajilore adds.

Between the lines: President Trump touted record-low unemployment among Black Americans in his first term, a milestone hit before the COVID-19 pandemic, as a key economic achievement.

• More recently, Trump has suggested that the administration's immigration crackdown would see more job opportunities go to Black workers — an outcome that has not come to pass.
• The White House did not respond to a request for comment by publication time.

The intrigue: Much of the recent surge in Black unemployment has stemmed from younger workers, another group that has seen unemployment rise as entry-level job opportunities dry up.

• But even among prime-age workers, the trend is concerning: Unemployment rates for prime-age Black workers, aged 25-54, hit 6.7%, up more than a percentage point from the same time last year. The comparable rate for white workers is 3%, the same rate as last November.

What to watch: Gaps in employment have also inched back up after touching historic lows relative to white counterparts.

• Roughly 76% of the Black prime-age population were employed as of November, about 6 percentage points less than the comparable measure for white workers.
• That's a far cry from the record 10 percentage point gap seen in 2011 during a sluggish recovery from the 2008 financial crisis.
• But it is still more than double the smallest gap on record of 2.6 percentage points — a milestone reached in early 2024.

Since the last edition of Macro, economists and Federal Reserve policymakers have raised more doubts about yesterday's notably cool inflation data.

Why it matters: Effects from the government shutdown — which prevented the Bureau of Labor Statistics from adequately collecting much necessary data — might be understating inflation in a more substantial way than previously believed.

• "I think the data were distorted in some of the categories — and that pushed down the CPI reading, probably by a tenth or so," New York Fed president John Williams told CNBC this morning.

The big picture: The issue stems from how the BLS handled housing inflation, specifically rents — part of a massive category that alone makes up 33% of the Consumer Price Index.

• In the last year, Fed officials said the government's reading on housing had put upward pressure on the overall measure, even as private data suggested cooling housing inflation.
• In effect, there are now doubts that, at least in October and November, the opposite was the case: artificially low housing readings putting downward pressure on the index.

Zoom in: In October, the BLS "carried forward" some housing data from April, a process that meant index values for rent measures were flat for that month, according to a statement given to the New York Times' Ben Casselman. (Data from November was collected as usual.)

• "Major issue was zeroing out" these gauges in October, Omair Sharif, the founder of Inflation Insights, posted on X yesterday.
• He noted that this would "artificially lower" yearly inflation rates until April.

The other side: "[R]egardless of bias, we know where measured shelter inflation is headed, because we have a very substantial lead on it in the form of market rents. That's far more important than any one data print," Fed governor Stephen Miran posted on X yesterday.