A new Federal Reserve survey revealed that poverty climbed in 2022, and minorities struggled to obtain a portion of the national net worth increase during the pandemic.
The central bank's triennial Survey of Consumer Finances (SCF) found that the real (inflation-adjusted) net worth of the typical U.S. household surged by 37 percent from 2019 to 2022, driven by higher home prices, stock appreciation, and government stimulus.
But not everyone has enjoyed the same level of gains in the last few years.
Fed data showed that the typical white family's income jumped by 1.3 percent. But black and Hispanic families recorded income declines of 1.6 percent and 1.1 percent, respectively. Moreover, wages for all Americans failed to keep up with inflation.
Despite much of the net worth gains emanating from housing, an illiquid asset, real average liquid wealth did not grow for minorities, the Fed found.
"Overall, families were wealthier in 2022 than in 2019 and appear to have had sufficient income to cover their recurring expenses, but some of their ability to cover their expenses with income may have been due to transitory factors that temporarily buoyed incomes in 2021," the report stated.
"While families can also cover expenses using wealth, particularly for Black and Hispanic families the gains in wealth were concentrated in housing, which is somewhat illiquid and may not be as useful as liquid wealth for covering recurring expenses. Real average liquid wealth, which includes assets such as cash, checking, and savings accounts, did not grow much for Hispanic families and fell for Black families."
The report noted that minority households benefited more from crisis-era stimulus and relief efforts, like stimulus checks, sweetened unemployment benefits, enhanced food stamps, and childcare tax credits. However, now that most of these programs have expired, families nationwide are contending with above-trend inflation that is eroding every households' purchasing power to differing degrees.
Since the beginning of the pandemic, consumers' purchasing power has decreased by 16 percent.
Additionally, the portion of families reporting they were uncertain about next year's income has risen yearly since 2019 for all ethnicities and races. But this uncertainty is more concentrated among black and Hispanic families, climbing 14.2 percentage points and 10.9 percentage points respectively.
"Once again, the cross-race patterns appear consistent with transitory income sources propping up families' income that they did not expect to continue in the future, especially for non-White families," the SCF said.
Economic pessimism was also widespread but it "was especially strong for non-white families." The study's respondents were more cynical about the U.S. economy's future in 2022 than in 2019.
"The percent of families saying the future economy will be worse skyrocketed in 2022 across all races and ethnicities," the report said. "In fact, the share of families expecting a worse economy is at or near record highs for all races and ethnicities."
In the end, according to data from the Census Bureau, even with the pandemic-era wealth gains, the poverty rate swelled to 12.4 percent last year.
President Joe Biden touted the U.S. economy at the Eisenhower Executive Office Building on Oct. 23, championing the successes that Bidenomics has enjoyed this year. President Biden spoke about the tech hubs and clean-energy jobs being planted across the country, whether in red states or in blue states.
"All this is part of my strategy to invest in America and invest in Americans," President Biden said.
"It's working. We're creating good jobs in communities all across the country, including places where, for decades, factories have been shut down, hollowed out when jobs moved overseas to find cheaper employment."
White House officials have been defending President Biden's economic vision but their remarks have yet to persuade voters, particularly those residing in swing states, including Michigan, North Carolina, and Pennsylvania.
According to a Morning Consult report, about 3 in 4 swing-state voters argued that the U.S. economy is headed in the wrong direction. They reported that their financial situation was better under former President Donald Trump than President Biden.
About half (49 percent) of swing-state voters say Bidenomics is bad for the economy, and the same percentage picked former President Trump as someone they would trust more to handle the economy.
"It reveals that the president's 'Bidenomics' pitch is not breaking through, as these voters are significantly more likely to trust his predecessor to handle their top voting issue," the polling firm noted.
James Galbraith, a left-leaning economist and author, asserts that it will be tough to convince struggling Americans that the economy is doing well under the current administration.
"Whatever stories Americans are told about the strength of the economy under President Joe Biden, they are not going to be persuaded to look past the issue of their own living standards," Mr. Galbraith wrote.
The first estimate of the third-quarter GDP growth rate will be released on Oct. 26, and estimates suggest an expansion between 4 and 5 percent. The U.S. economy added 336,000 new jobs in September, while the unemployment rate remained below 4 percent. However, real wages are down 3 percent since 2021, credit card debt is above $1 trillion, and pandemic-era savings are on the cusp of being eradicated.
Some economists purport that while the headline numbers are strong, issues underneath are starting to fester.