Understanding the Disparities: An Examination of How White Americans Are Profiting from the Stock-Market Surge while Others Miss Out
The stock market has been a hot topic in recent years, with many investors seeing significant gains in their portfolios. However, a recent report by the Federal Reserve Bank of New York has shed light on the disparities in wealth accumulation among different racial and age groups in the United States. While some Americans have been reaping the benefits of the stock-market surge, others have been left behind.
According to the report, white households have been the primary beneficiaries of the stock market’s success. More white households hold equities and mutual funds, which have performed exceptionally well and boosted investors’ net worth. In contrast, Black and Latino households have not seen the same level of growth in their investments. Only 40% of Black families own stock, compared to nearly two-thirds of white families. This disparity in stock ownership has contributed to the widening racial wealth gap.
Another factor contributing to the wealth disparities is age. Young people, specifically those aged 18 to 39, have seen their investments in equities grow significantly between 2019 and mid-2023. This has resulted in faster net worth growth for white individuals and those in the younger age group compared to their Black, Latino, and older counterparts. The report highlights that groups with more exposure to businesses, equities, and mutual funds experienced much faster financial asset growth.
The Case-Shiller index, which measures home-value appreciation, also saw uneven gains during this period. Approximately 73% of white families own their homes, while only 46% of Black families and 51% of Latino families do. This disparity means that white individuals experienced sharper increases in the value of real estate assets.
The COVID-19 pandemic further exacerbated the racial wealth gap. Adjusted for inflation, the wealth of Black households fell 1.4% between the first quarter of 2019 and the third quarter of 2023, despite some recovery over the last year. In contrast, white individuals saw their collective net worth rise by 29% during this period.
The report attributes these disparities to gaps in participation in the stock market. Stock equity makes up just 4% of Black wealth but 30% of white wealth. This is partly due to Black families having fewer funds to invest and a historical lack of trust in the stock market. Additionally, the report suggests that younger individuals, particularly those under 40, have been able to increase their wealth more quickly than other age groups due to their increased holdings of equities and mutual funds.
While the stock-market surge has brought significant wealth to some Americans, it has also highlighted the ongoing disparities in wealth accumulation based on race and age. The report’s findings emphasize the need for greater financial education and opportunities for marginalized communities to participate in the stock market. Addressing these disparities will be crucial in working towards a more equitable society where everyone can benefit from economic growth and prosperity.
