New Fed Data Reveals Declining Incomes and Economic Pessimism Among Minorities Under ‘Bidenomics’.
A New Federal Reserve Survey Reveals Growing Poverty and Racial Inequality
A recent survey conducted by the Federal Reserve has uncovered concerning trends in poverty and racial inequality in the United States. The survey, known as the Survey of Consumer Finances (SCF), revealed that while the net worth of the average American household has increased significantly in recent years, minorities have struggled to share in these gains.
The SCF found that from 2019 to 2022, the real net worth of the typical U.S. household rose by an impressive 37 percent. This increase was driven by factors such as rising home prices, stock appreciation, and government stimulus. However, not all segments of the population have benefited equally from these gains.
According to the data, the income of white families increased by 1.3 percent during this period. In contrast, black and Hispanic families experienced declines in income of 1.6 percent and 1.1 percent, respectively. Additionally, wages for all Americans failed to keep up with inflation.
While much of the net worth gains were attributed to housing, which is an illiquid asset, the report found that real average liquid wealth did not grow significantly for minorities. This means that these gains in wealth may not be as useful for covering recurring expenses for black and Hispanic families.
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The survey also highlighted the impact of crisis-era stimulus and relief efforts on minority households. Programs such as stimulus checks, enhanced unemployment benefits, and childcare tax credits provided some support to these families. However, with the expiration of many of these programs, families across the country are now facing above-average inflation, which is eroding their purchasing power.
Since the start of the pandemic, consumers’ purchasing power has decreased by 16 percent, according to data from the Federal Reserve Bank of St. Louis.
Furthermore, the survey revealed increasing uncertainty about future income among all ethnicities and races since 2019. This uncertainty is particularly pronounced among black and Hispanic families, with a significant rise in the percentage of these families reporting uncertainty about their future income.
Economic pessimism was also prevalent, especially among non-white families. Respondents expressed greater cynicism about the future of the U.S. economy in 2022 compared to 2019. The percentage of families expecting a worse economy reached record highs across all races and ethnicities.
Despite the wealth gains seen during the pandemic, the poverty rate in the United States rose to 12.4 percent in 2022, according to data from the Census Bureau.
Bidenomics: Assessing the Impact
President Joe Biden has been championing his economic agenda, known as Bidenomics, as a driver of growth and prosperity. However, public opinion suggests that many voters remain unconvinced.
A recent Morning Consult report revealed that a majority of swing-state voters believe the U.S. economy is heading in the wrong direction. They also reported that their financial situation was better under former President Donald Trump.
While the headline numbers for the economy may appear strong, some economists argue that underlying issues are starting to emerge. Real wages have declined, credit card debt is soaring, and pandemic-era savings are dwindling.
James Galbraith, a left-leaning economist, emphasized that Americans prioritize their own living standards over any narrative about the strength of the economy. Convincing struggling Americans that the economy is doing well under the current administration will be a challenging task.
The first estimate of the third-quarter GDP growth rate is set to be released soon, and early estimates suggest a healthy expansion. However, it is crucial to address the concerns and struggles faced by individuals and families beneath the surface of these headline numbers.
How did minority communities fare in terms of net worth growth compared to the overall average for American households?
Acial disparities in wealth accumulation have long been a concern in the United States, and the latest Federal Reserve survey only underscores the severity of the issue. The Survey of Consumer Finances (SCF) has revealed that while the overall net worth of American households has experienced significant growth in recent years, the same cannot be said for minority communities.
From 2019 to 2022, the real net worth of the average U.S. household increased by an impressive 37 percent. This can be attributed to various factors such as rising home prices, stock appreciation, and government stimulus. However, the benefits of this growth were not evenly distributed across the population.
According to the survey, white families saw a modest increase in income of 1.3 percent during this period. In stark contrast, black and Hispanic families experienced declines in income of 1.6 percent and 1.1 percent, respectively. Furthermore, wages for all Americans failed to keep up with inflation, further exacerbating the financial struggles faced by many households.
While housing played a significant role in the accumulation of net worth, it is worth noting that real average liquid wealth did not see significant growth for minorities. This means that the wealth gained may not be easily accessible for covering everyday expenses, particularly for black and Hispanic families.
The survey also shed light on the impact of crisis-era stimulus and relief efforts on minority households. Programs such as stimulus checks, enhanced unemployment benefits, and childcare tax credits provided some support to these families. However, with the expiration of many of these programs, families across the country are now facing above-average inflation, further eroding their purchasing power.
Adding to the concerns, the survey revealed increasing uncertainty about future income among all ethnicities and races since 2019. Black and Hispanic families, in particular, reported a significant rise in uncertainty regarding their future income. This economic pessimism was particularly prevalent among non-white families.
These findings highlight the persistent racial wealth gap in the United States and the urgent need for targeted policies and interventions to address the systemic inequalities that perpetuate these disparities. The survey data serve as a reminder that economic progress should not be measured solely by overall net worth or GDP growth but by the equitable distribution of wealth and opportunities.
Efforts must be made to promote inclusive economic policies that address the specific challenges faced by minority communities. This includes initiatives to improve access to quality education, affordable housing, job opportunities, and affordable healthcare. Additionally, addressing systemic racism in lending practices, financial institutions, and employment opportunities should be a priority.
It is crucial for policymakers, businesses, and the public to recognize and confront the existing disparities and work together to create a more equitable society. Only through collective efforts and a commitment to social and economic justice can we begin to bridge the gap and build a future where every American has an equal opportunity to thrive.
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