Quarterly Jamaica Diaspora & Returnee Update — January to March 2009

Published: 2 April 2009 | Jamaica Homes News

Key Takeaways

• Barack Obama Sworn In as 44th US President on 20 January
• Global Stock Markets Hit Multi-Year Lows in March
• UK Economy Officially Enters Recession After Two Quarters
• Jamaica’s Remittances Face Sharpest Decline in Modern Era
• Madoff Fraud Sentencing Approaches After December Arrest
• G20 Leaders Convene in London to Tackle Global Crisis

Introduction: The World Obama Inherited

Q1 2009 opened with one of the most extraordinary political moments in modern history and closed with some of the most alarming economic data in living memory. For Jamaica’s diaspora, the quarter framed the intersection of historic hope and immediate financial hardship with unusual clarity: Obama’s inauguration on 20 January was the high-water mark of a political hope that the collapsing economic indicators of the weeks that followed immediately tested. This update draws on Jamaica Gleaner, Jamaica Observer, Bank of Jamaica, PIOJ, MFAFT, and Caribbean diaspora media through 31 March 2009.

Obama’s Inauguration: The Diaspora’s Historic Moment

The inauguration of Barack Hussein Obama as the 44th President of the United States on 20 January 2009 was experienced by Jamaica’s diaspora community with an intensity that went beyond political partisanship and beyond the normal registers of civic participation. In the Caribbean diaspora communities of New York, London, Toronto, and the US Southeast, Inauguration Day was observed as something closer to a communal rite of passage than a political event: school absences were tolerated, workplaces ran televisions, churches held special services, and community centres organised viewing parties that brought together hundreds of community members who wanted to witness the moment collectively rather than alone.

The particular resonance for Caribbean diaspora communities was generational and historical in ways that extended beyond American civic culture. For the generation of West Indian migrants who had arrived in Britain and North America in the 1950s, 1960s, and 1970s — who had experienced the specific humiliations and structural exclusions of racial discrimination in their adopted countries — Obama’s election and inauguration was a validation of something they had been told, in a thousand explicit and implicit ways, was impossible. For their children and grandchildren, born in those adopted countries, the inauguration was a reframing of what was politically achievable that would take years to fully absorb.

In Jamaica itself, Inauguration Day was treated as a national occasion of sorts. Schools and offices arranged viewing. The Jamaica Gleaner’s coverage was comprehensive. The Jamaican government’s congratulatory message emphasised the historic significance for people of African descent globally, and the PM’s office expressed hope for stronger Jamaica-US relations under the new administration. The diaspora community’s connection to the inaugural moment was amplified by the Caribbean heritage of some of the Obama coalition’s most prominent figures and by the significant Caribbean-American voting bloc in Florida, New York, and New Jersey that had been part of the winning coalition.

The Financial Crisis: Markets Hit Bottom

The stock market declines that had begun with Lehman Brothers’ September 2008 collapse continued through Q1 2009, reaching their nadir in early March. The S&P 500 touched 666 points on 6 March 2009, a loss of approximately 57 per cent from its October 2007 peak. For Caribbean-American diaspora households with 401(k) retirement accounts — the primary form of retirement saving for the generation of community members who had entered stable employment in the 1980s and 1990s — the portfolio losses were devastating. Community members who had been within a decade of retirement found themselves staring at accounts worth half what they had been eighteen months earlier.

The housing market’s continuing decline added a second layer of wealth destruction. Caribbean-American homeownership, concentrated in the suburban zones of New York, New Jersey, and South Florida that had seen the sharpest house price inflation and were now seeing the sharpest declines, had been one of the community’s primary vehicles of wealth accumulation. Negative equity — owing more on a mortgage than the property was worth — was now affecting significant numbers of homeowners in these communities. Foreclosure rates in the Miami-Dade County zip codes where Jamaican-American populations were concentrated were among the highest in the state.

UK Recession: British-Jamaican Households Under Pressure

The UK Office for National Statistics confirmed in January 2009 that the British economy had entered recession, having contracted in both Q3 and Q4 2008. The recession would prove to be the deepest in Britain since the 1930s, with total GDP falling by approximately 6 per cent from peak to trough. For British-Jamaican communities concentrated in London, Birmingham, Manchester, and the major urban centres, the recession’s impacts were being felt through rising unemployment, reduced working hours, and the particular vulnerability of the public sector and NHS employment that many community members depended upon.

The Gordon Brown government’s fiscal response — stimulus spending to support demand, bank bailouts to stabilise the financial system, and the temporary VAT reduction — maintained public services through the recession’s acute phase. But the scale of the fiscal deficit that the recession and the bank bailouts were creating — approaching 12 per cent of GDP — was generating a political debate about post-recession austerity that British-Caribbean community organisations were watching carefully. Whoever won the next general election, expected in 2010, would face intense pressure for spending cuts that would affect precisely the communities where Caribbean-heritage populations were concentrated.

Jamaica’s Remittances: A Year of Decline

Bank of Jamaica data through Q1 2009 confirmed that remittance flows were tracking significantly below 2008 levels, as the combination of US and UK economic distress compressed diaspora household incomes and reduced the surplus available for family support transfers. The projected full-year 2009 total — approximately US$1.8 billion against 2008’s approximately US$2.0 billion — represented a decline that had no precedent in the modern remittance data series. For Jamaica’s macroeconomic planners, remittances had been the one resilient external revenue stream through previous crises; their decline in 2009 removed a cushion that the economy, facing simultaneous bauxite and tourism sector contractions, could not afford to lose.

The G20’s London summit on 2 April — just after this bulletin’s publication date — and the IMF package it was expected to produce offered some hope for the stabilisation of global financial conditions that would, in turn, support the economic recovery in Jamaica’s primary remittance-sending countries. The Golding government’s ongoing IMF negotiations — for a standby arrangement to support Jamaica’s balance of payments and signal fiscal credibility — were expected to conclude in the months ahead. We report next from 2 July 2009.

This Quarterly Jamaica Diaspora and Returnee Update is researched and published by Jamaica Homes News. Sources include Jamaica Gleaner, Jamaica Observer, Bank of Jamaica, PIOJ, MFAFT, and PICA. All figures and developments are accurate as of the publication date, 2 April 2009.

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