Fed: Pre-virus economy failed to close racial gaps

Typical white family has 8 times wealth of Black families

WASHINGTON — The solid growth that the United States enjoyed before the viral pandemic paralyzed the economy last spring failed to reduce racial disparities in Americans’ income and wealth from 2016 through 2019, according to a Federal Reserve report Monday.

Though Black and Hispanic households reported sharper gains in wealth than white households did, those increases weren’t enough to noticeably narrow the racial gaps. The typical white family possessed eight times the wealth of Black families and five times the wealth of Hispanic families in 2019, the Fed said.

The Fed’s Survey of Consumer Finances, released every three years, analyzed incomes and wealth in 2019. The survey found that income for the typical U.S. family rose 5%, adjusted for inflation, from 2016 to 2019 to $58,600. That was weaker than the 9% income gain the typical family got from 2013 through 2016.

The survey provides a trove of information on family finances in the United States, from the percentage of households that own stock (53%) to the proportion that have a retirement account (50%).

While the report shows increases in income and wealth for lower-income and Black families, many economists worry that the pandemic has reversed those gains. Job losses this year have been concentrated among lower-income workers in the restaurant, hotel, retail and travel industries. Those workers are disproportionately nonwhite.

Some measures did show a narrowing of income disparities.

Average income among the wealthiest one-tenth of American families fell 6%, largely because of a steep fall among the richest 1%, Federal Reserve economists said. By contrast, average incomes among the bottom 60% of families rose.

Yet average figures can be skewed by huge incomes at the very top.

The Fed report noted that while average incomes for all families fell 3% from 2016 through 2019, excluding the richest 1%, average incomes rose 3.1%. Income for the richest Americans can fluctuate more sharply year to year than income for lower-income earners, Fed economists said, and likely fell because of smaller gains from stock, bond and property sales.

Economists typically look at median incomes, which reflect the midpoint of all earners, as a way to filter out the extremes. Median income among the poorest onefifth of Americans rose 3%, while median income for the richest one-tenth increased 6%, the Fed said.

The median family income for whites grew 6%. For Black households, it was slightly better at 7%. For Hispanic families, incomes fell 1%. Median income for white families last year was $69,000, compared with $40,300 for Black families and $40,700 for Hispanics.

Poorer Americans and Black and Hispanic households did gain wealth from 2016 through 2019, mostly from an increase in home ownership and home values.

But those increases came from such low levels that they didn’t much narrow overall income disparities, the Fed said.