The stock market has proven to be the fastest way to accumulate wealth in recent years, outperforming other assets such as housing. However, this prosperity has not been evenly distributed among Americans.

A recent report by the Federal Reserve Bank of New York highlights the persistent racial and age-based wealth inequality in the United States. The ownership of financial assets varies greatly between different groups, contributing to this disparity. Notably, a larger proportion of white households hold equities and mutual funds, which have experienced exceptional growth and consequently boosted investors’ net worth.

Furthermore, young individuals have increased their investments in equities between 2019 and mid-2023. Consequently, the net worth of white individuals and those aged 18 to 39 has grown at a faster rate compared to Black and Latino individuals and older generations.

The New York Fed report states that “groups with more exposure to businesses, equities, and mutual funds experienced much faster financial asset growth.”

During the period between 2019 and mid-2023, the S&P 500 saw cumulative returns of 91.8%. However, while nearly two-thirds of white families own stock, only 40% of Black families do, according to the Federal Reserve’s data from 2022.

Similarly, the Case-Shiller index, which measures home-value appreciation, grew by 51.9% during the same period. Once again, these gains were distributed unevenly. Approximately 73% of white families own their homes, compared to 46% of Black families and 51% of Latino families. The New York Fed report highlights that “white individuals experienced sharper increases in the value of real-estate assets” from 2019 to mid-2023.

It is important to recognize that the racial wealth gap has worsened during the pandemic. Adjusted for inflation, the wealth of Black households, with over 50% held in retirement accounts, fell by 1.4% between the first quarter of 2019 and the third quarter of 2023, amounting to $4.6 trillion. Although there has been some recovery over the past year, this decline underscores the ongoing challenges faced by Black households.

From the archives (November 2023): These Americans could afford a mortgage. But they’re stuck in a cycle of renting.

White Individuals’ Wealth Surges Amidst the Pandemic

The pandemic has further exacerbated the racial wealth gap. Adjusted for inflation, the wealth of Black households, a significant portion of which is invested in retirement accounts, declined by 1.4% between the first quarter of 2019 and the third quarter of 2023, resulting in a total of $4.6 trillion. However, there has been some slight recovery over the past year.

Wealth Disparity in the U.S. Persists, Highlighting Racial and Age Disparities

Stock Market Participation and Wealth Disparity

Age Group Analysis: Young People Outpace Others

The report did not provide a breakdown of wealth changes by both age and race.

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