American families shored up their savings substantially between 2016 and 2019, according to Federal Reserve data released on Monday, but wealth inequality remained stubbornly high — and that was before the coronavirus pandemic took hold.
Median net worth climbed by 18 percent in those three years, the Fed’s Survey of Consumer Finances showed, as median family income increased by 5 percent. The survey, which began in 1989, is released every three years and is the gold standard in data about the financial circumstances of households. It offers the most up-to-date and comprehensive snapshot of everything from savings to stock ownership across demographic groups.
The figures tell a story of improving personal finances fueled by income gains and rising home prices, the legacy of the longest U.S. economic expansion on record, one that had pushed the unemployment rate to a half-century low and bolstered wages for those earning the least. Yet many Americans had less in savings than they did before the last recession a decade ago and yawning gaps persisted — the share of wealth owned by the top 1 percent of households was still near a three-decade high.
Nearly all of the data in the 2019 survey were collected before the onset of the coronavirus. Economists worry that progress for disadvantaged workers has probably reversed in recent months as the pandemic-related shutdowns threw millions of people out of work. The crisis has especially cost minority and less-educated employees, who are more likely to work in high-interaction jobs at restaurants, hotels and entertainment venues. Inequality appears to be poised to widen as lower earners fare the worst.
Employment remains sharply depressed compared with before the pandemic, leaving many households in a more precarious position. Stock market indexes have rebounded, which should help to support household wealth, but the benefits will mostly accrue to the rich. Only about half of Americans hold stocks, the survey showed.
“Without a doubt, it will worsen,” Julia Coronado, founder of MacroPolicy Perspectives and a former Fed economist, said of inequality. “We know that the skew of the unemployment is toward lower-income, more economically vulnerable people.”
Before the pandemic hit, Michelle Bernier was finally rebuilding after a lost decade.
Ms. Bernier, 47, was injured shortly before the last recession and lost her job at a nursing home in Lewiston, Me. By the time she was well enough to work again, the economy had collapsed, and she and her husband had to rely on food stamps.
By last year, however, things were looking up. She had a job she loved, as a home nurse, and was earning $20 an hour.
“I was doing pretty good, not great, but pretty good,” she said. “We had groceries, we had our car, we had our house. We had what we needed and we had extra money to play with.”
Coronavirus wiped it all away. Her clients no longer wanted outsiders coming to their homes, meaning Ms. Bernier was out of work. The extra $600 a week in unemployment benefits from the federal government kept her afloat for a while. But that supplement ended in July, and she isn’t sure how she will get by without it. The bill collectors that she thought she had shaken are already hounding her again.
“So here I am stuck without a job again and floundering, trying to figure out what my next career will be,” she said.
The newly released data suggest that families with lower pretax incomes, like Ms. Bernier’s, were catching up to their richer counterparts between 2016 and 2019. The bottom 90 percent of the income distribution actually saw its share of overall earnings increase slightly in 2019 — reversing a decade-long decline. Even so, a Fed analysis noted that the rebound happened from record lows.
And even at a moment when tighter labor markets were translating into more broadly shared prosperity, divides in wealth — savings amassed over time, rather than the money a family earns in a given year — remained high.
In 1989, the top 1 percent of wealth holders held about 30 percent of the nation’s net worth. That had jumped to nearly 40 percent in 2016 and was little changed in the latest survey, Fed economists said.
While wealth did climb slightly for those in the bottom half of the distribution, the poorer half of American families held just about 1 percent of the nation’s savings in 2019, the Fed data and a related report showed.
The survey’s overall wealth measure does not include defined benefit pension plans and Social Security benefits, which are hard to value. An augmented measure that incorporates pension plans shows that the wealth share at the top has still risen, but by less, according to a Fed report.
Only the richest 10 percent held more wealth in 2019 than on the eve of the 2007 to 2009 recession, based on the release, though broad-based progress was beginning to take hold.
“The late recovery from the Great Recession was finally starting to help people at the bottom a little bit,” said Ernie Tedeschi, policy economist at Evercore ISI. The pandemic recession “is definitely a setback. I hope that it’s a setback we can get through faster than we did after the Great Recession.”
Financial assets have long been particularly concentrated in the hands of the rich, and that trend persisted through 2019. The median family with stocks among the wealthiest 10 percent held about $780,000 in them, directly or indirectly, last year. The median family in the bottom quarter with stocks held a little more than $2,000, the data showed.
The percentage of lower-wealth households that held some stocks climbed, but remained far lower than for the rich. About 94 percent of the wealthiest families hold stocks, compared to one of every five households in the bottom 25 percent.
That means that while lower-wealth families may have been less touched by stock market declines in the spring, they also did not benefit nearly as much when prices surged this summer.
President Trump often highlights the stock market’s performance as a signal of success, but the data reinforce that it does not speak to how many Americans are doing financially.
The Fed’s newly released figures also underline that dramatic gaps in income and wealth persist across racial groups. Black families’ median wealth is less than 15 percent of white families’ net worth — it stood at just $24,100 in 2019 to $188,200 for white households. Hispanic families held $36,100.
The concern now is that inequities could deepen as workers at the bottom lose jobs and incomes.
The unemployment rate was 8.4 percent in August, according to the Labor Department, but the rate was 13 percent for Black people. Likewise, the jobless rate for those with less than a high school diploma was more than twice that for adults with a bachelor’s degree or more.
The survey also showed how wealth concentration is perpetuated across generations. In 2019, the wealthiest 1 percent of families expected $1.6 million in inheritance. Those in the bottom half of the distribution anticipated just $39,000.
“Inherited wealth can play a direct role in wealth accumulation — with up to one-half of total wealth attributable to intergenerational transfers,” the Fed said in a report. “Growing up in a wealthy household may also impart other indirect advantages — through social connections, for example, or family loans — that play a role in wealth transmission.”
Ben Casselman contributed reporting.