By Howard Schneider
WASHINGTON (Reuters) – Income inequality in the United States narrowed in the first three years of the Trump administration as rising incomes and a low unemployment rate fueled gains for lower-income and less educated families, according to U.S. Federal Reserve data released on Monday.
Wealth inequality was largely unchanged, with the top 10% of families holding about 71% of family wealth in 2019 versus 2016, the Fed found in its latest Survey of Consumer Finances, conducted every three years.
But the period did see proportionately larger gains in wealth for Black and Hispanics families, the Fed said, with the median net worth for Black families rising 33% and for Hispanic families rising 65% compared with a 3% gain in the median for white families. However the absolute gap remained large: the median income for white families, at $188,200, was nearly 8 times that of the $24,100 median for Blacks, and over 5 times that of the $36,100 of Hispanic families.
The data from the Survey of Consumer Finances provide a snapshot of how income, assets and debt are distributed across the population, and in this case how the benefits of the final years of a decade-long economic expansion had begun flowing to typically less advantaged parts of the population.
Though marked by a strong bull market for stocks, the period also saw rising home ownership rates and rising home prices that generally helped less well-off families boost their net worth, or the value of all assets minus any debt.
According to the Fed’s survey, incomes were rising faster for non-whites who entered the period with less wealth and without a college education. An overall decline in average income, the Fed said, was due to less income for the highest earners, who are dependent on more volatile business and equity earnings.
The survey was conducted last year, before the coronavirus pandemic ended the expansion and pushed the U.S. into a recession that may endanger some of the very gains documented in the report.
(Reporting by Howard Schneider; Editing by Steve Orlofsky)
