Wealth inequality in the United States intensified during the current economic recovery, particularly impacting Black and Hispanic households, according to a recent study by the New York Federal Reserve. The inflation-adjusted wealth of white households surged ahead of Black and Hispanic households between the beginning of 2019 and the third quarter of the previous year.
The study utilized data from the U.S. Federal Reserve, encompassing household assets such as stocks and real estate, along with liabilities like mortgages and loans, adjusting these values for inflation.
The findings disclosed that by the third quarter of last year, the net worth of white families had soared by 28% since the start of 2019, while Hispanic households experienced a 20% increase. In contrast, the net worth of Black families was approximately 1.5% lower than pre-pandemic levels, leaving them worse off.
In a blog post released on Wednesday, New York Fed researchers attributed this disparity to shifts in the value of financial assets, with white households benefiting from larger equity holdings, driving more robust wealth gains. The research underscored that Black household wealth was more heavily concentrated in retirement holdings.
Despite all demographic groups witnessing gains in net worth during the peak of the pandemic in 2020 and 2021, thanks to expansive federal fiscal programs providing unemployment and other benefits, subsequent declines amidst rising inflation and weakening financial markets disproportionately affected Black families. As a result, their net worth fell below the 2019 levels.
This study adds to the ongoing scrutiny of how households navigated the pandemic and the current economic expansion. It highlights a concerning trend that despite trillions of dollars in fiscal spending to support families during the health crisis, there is no evidence of lasting changes in the distribution of wealth among major demographic groups.
