Racial disparities, wealth gap persist as Americans grew 30% richer during pandemic: study
By Ryan General
Despite the economic downturn triggered by the COVID-19 pandemic, American households experienced a remarkable 30% increase in wealth from 2019 to 2021, an analysis conducted by the Pew Research Center revealed.
Thriving during the pandemic: Data sourced from the Board of Governors of the Federal Reserve System show that the typical American household grew its wealth from $128,200 in 2019 to $166,900 in 2021, after adjusting for inflation. The findings show the wealth growth despite the significant job losses and disruptions in earnings experienced during the pandemic.
Dynamics across income brackets: Looking into the latest U.S. Census Bureau’s Surveys of Income and Program Participation (SIPP), Pew Research’s analysis categorized households into four groups: “Poorer,” “More Solvent,” “Wealthier” and “Richer.” SIPP’s sample consisted of over 21,000 households in the 2020 survey, almost 24,000 in 2021, and over 17,000 in 2022.
Poorer households, constituting the bottom 25%, experienced modest gains from having a net worth of zero or less in December 2019 to half having a net worth of $500 or less in December 2021. Meanwhile, households deemed wealthier and richer observed substantial increases, with gains of $57,800 and $172,200, respectively, at the median, during the same period.
Persistence of racial disparities: The report noted disparities among different communities, with poorer Black households continuing to face financial challenges, although reducing their debt from a median $10,100 in 2019 to $4,000 in 2021. Poorer Hispanic households neared financial solvency, reaching a median net worth of $0 in 2021, compared to a net debt of $1,100 back in 2019. In contrast, poorer Asian households surpassed other groups, boasting a median wealth increase of $8,900 in 2021, nearly twice that of poorer White households.
Wealth gap and inequality: In general, white households were revealed to have 13 times more wealth than Black households in 2019 and nine times more in 2021.
The report also reveals persistent wealth inequality, which is particularly evident among Black households. Richer Black households held 90% of the racial group’s wealth in 2021, a gap greater than any other group.
Factors that drove the overall growth: The report attributed the household wealth increase during the pandemic to various factors, including reduced spending, historically low mortgage rates and recovering stock prices.
The CARES Act, stimulus payments, unemployment benefits and other relief measures also provided significant financial support. However, recent trends indicate a potential reversal, as incomes fell, household spending rose, and the growth in home values slowed in 2022.
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