A booming U.S. stock market doesn’t benefit all racial and ethnic groups equally

US stock markets have been on a roll since late October, with shares trading at or near record levels. But booming markets are likely to benefit white families more than families of other racial and ethnic groups.

This is because white families are the most likely to own publicly traded stocks, either directly or indirectly, such as through a retirement account or mutual fund. In 2022, nearly two-thirds of white families (66%) owned stocks directly or indirectly, compared to 39% of Black families and 28% of Hispanic families, according to the Federal Reserve. Consumer Finance Survey (SCF).

And even when families of other racial and ethnic backgrounds own stocks, they own far less than white families. He median The total value of stock holdings among white families in 2022 was $67,800, compared to $24,500 for Hispanic families and $16,500 for Black families. (The SCF includes limited data for Asian American families, discussed below, but not data on their stock holdings or ownership of other specific assets.)

Similarly, the mean The value (or average) of total stock holdings was $568,100 among white families, $97,400 for Hispanic families, and $80,400 for black families. The means are considerably higher than the medians because stock ownership is highly skewed. Most families own relatively little, but some very wealthy families own quite a bit.

The Pew Research Center conducted this analysis to explore U.S. stock ownership among families of different races and ethnicities. Our main data source is Consumer Finance Survey (SCF), sponsored by the Federal Reserve Board and the Department of the Treasury. The SCF, a cross-sectional survey of American families, has been conducted in its modern form every three years since 1989. It provides data on families' income, assets, debts and other liabilities, pensions, and net worth, along with their demographic characteristics. .

The SCF defines a “family” as an “economically dominant” single person or couple, along with all other household members who are “financially interdependent” on that person or couple. The race or ethnicity of a family is determined by the race or ethnicity of the respondent: the economically dominant single person in the family, the man in an opposite-sex couple, or the oldest person in a same-sex couple.

SCF asset ownership data is broken down into four racial and ethnic groups: non-Hispanic white, non-Hispanic black, Hispanic/Latino, and other or multiple races. This latter group includes, but is not limited to, Asian Americans, Native Americans and Alaska Natives, Native Hawaiians and Pacific Islanders, and people who report more than one racial identification.

In 2022, the SCF was adjusted to oversample households that were predicted to be non-Hispanic Black, Hispanic, or Asian American. This allowed the survey, for the first time, to report income and net worth figures specifically for Asian families, which accounted for nearly 4% of families in that year's survey. However, the 2022 report does not detail Asian families' ownership of specific assets, such as stocks.

Along with its usual geographic-based random sample of American families, the SCF includes a supplemental sample that is intended to disproportionately include wealthy families. This is because such families own a relatively large proportion of certain low-ownership assets, such as non-corporate businesses and tax-exempt bonds. In 2022, 3,298 of the SCF respondents were from the random sample and 1,304 from the supplemental sample.

SCF dollar amounts are expressed in 2022 dollars. Fed researchers converted figures from previous years to 2022 dollars using the “current methods” version of the Consumer Price Index for all urban consumers (CPI- U-RS). All dollar figures are rounded to the nearest hundred dollars.

This analysis also includes data from a 2023 Center report and a 2024 study from the Federal Reserve Bank of New York. You can find more information about these sources in the links in the text.

Stock ownership over time, by race and ethnicity

These patterns have been widely evident since 1989, the first year the SCF was conducted in its current form. Still, more black families are exposed to the stock market than ever before. The proportion of black families owning stocks directly or indirectly had peaked at 36% in 2001, amid the dotcom crash That brought down many first-wave Internet companies.

But consider: In 1989, only 11% of black families owned stocks, compared to 38% of white families. In other words, about the same proportion of white families owned stocks then as black families do now.

Meanwhile, the share of Hispanic families owning stocks has fluctuated between 20% and 30% since 1995, peaking at 29% in 2001.

Overall, 58% of American families had some form of exposure to the stock market in 2022, the highest level ever recorded by the SCF. The average value of those holdings was $52,000; the median value was $489,500.

Many Ways to Own Stocks

Of course, there are many ways to participate in the stock market. According to the SCF, only 21% of American families own stocks directly. Even fewer own “pooled investment funds” – such as mutual funds and exchange-traded funds (ETFs) – or other investment vehicles that typically include stocks among their holdings.

By far the most common way to own stocks is through a retirement plan, such as an employer-sponsored 401(k) or 403(b) program or an individual retirement account (IRA). A record 54% of American families had such a retirement plan in 2022 (note that these types of accounts may include assets other than stocks).

However, there are once again large gaps between racial and ethnic groups when it comes to retirement accounts. While more than six in ten white families (62%) have at least one such account, only 35% of black families and 28% of Hispanic families do.

A graph showing that white families have more retirement accounts than those of other races and ethnicities.

And nonwhite families' retirement accounts tend to be much smaller. The median value of Black families' retirement accounts in 2022 was $39,000, compared to $55,600 for Hispanic families and $100,000 for white families. The disparity in mean The values ​​were even broader: $117,500 for black families and $120,300 for Hispanic families, but $380,300 for white families.

TO Pew Research Center Analysis 2023 found similar gaps in asset ownership at the household level using a different data source, the U.S. Census Bureau's Survey of Income and Program Participation. That analysis found that 47% of Asian households and the 35% of white households owned bonds, stocks and mutual funds in 2021, compared to 18% of Black households and 16% of Hispanic households.

Not only are white families and households more likely to own stocks, but stocks also make up a larger proportion of the white population. individuals general wealth.

TO recent study from the Federal Reserve Bank of New York found that 35% of white Americans' individual financial wealth is invested in stocks and mutual funds, compared to 8% and 14% of black and Hispanic Americans' financial wealth, respectively. Researchers at the New York Federal Reserve noted that people with more of those types of investments tended to see their wealth grow faster between 2019 and 2023 than people with fewer, because those types of assets rose in value especially quickly during that time. period.

Comparison of average net worth

Financial investments are just one factor that contributes to a family's overall net worth, which is calculated as total assets owned minus total debts. According to SCF data, Asian American families as a whole have a higher median net worth than all other racial and ethnic groups. (Other research, however, has found that Economic well-being varies widely. among groups of Asian origin.)

The median net worth of Asian American families in 2022 was $536,000, nearly double that of white families ($285,000) and far ahead of Hispanic families ($61,600), Black families ($44,900), and families of other or multiple races ($62,900).

Leave a Comment


No comments yet. Why don’t you start the discussion?

Leave a Reply

Your email address will not be published. Required fields are marked *