The Americans that got richer during the pandemic: report

US households got a boost to their finances during the pandemic, though the increases in wealth differed based on racial, ethnic and economic backgrounds, according to a new report.

Between 2019 and 2021, the median household’s net worth increased 30%, to $166,900, according to Pew Research Center’s latest report released Monday, as COVID-related lockdowns provided less opportunities for impulse purchases and employees could pad their savings accounts by working from home and ditching expenses like commuting costs and expensive lunch runs.

White and Asian households increased the most in total dollars from 2019 to 2021, Pew Research concluded, which was first reported on by The Wall Street Journal.

White households were 13 times wealthier than black households at the beginning of this study, Pew said, underscoring racial and ethnic gaps that closed only slightly three years later.

By the end of 2021, white households were nine times wealthier than black households.

Wealth gaps were wider among lower-income households, according to the report.

Low-income white households had 21 times the wealth of low-income black households, which experienced a financial boost during the pandemic, though it likely wasn’t enough to lift them fully out of debt, according to Pew.

One in four black households and one in seven Hispanic households had zero wealth at the end of 2021, though they reportedly made headway on their debt.

Poorer black households managed to trim their debt level by about $6,000 in the three-year period, from $10,100 to $4,000, Pew reported.

Poorer Hispanic households, meanwhile, started 2019 and ended 2021 with an average net worth of $0, though they made a dent in their $1,100 debt over this time.

The average black and Hispanic households, meanwhile, had a net worth of $27,100 and $48,700 by the end of 2021, respectively, Pew reported.

The least wealthy Asian and white households ended the pandemic with a net worth of $8,900 and $4,700, respectively, according to Pew’s findings. 

These low-earning families are likely now under greater stress than they were in 2019, however, because factors that boosted wealth during the pandemic — such as near-zero interest rates, low inflation and rents reduced to historic lows — have since been reversed.

Inflation has been an economic headwind since 2022, when it climbed to its 9.1% peak that June.

Though it’s been cooling ever since, last month’s 3.2% advance was the first time in over a year that inflation had slowed month-over-month as gasoline prices eased and increases in housing costs slowed and stirred hopes that prices are finally headed in the right direction.

Meanwhile, borrowing money hasn’t been this expensive in over two decades, as interest rates sit at 5.25% and 5.5% with little surety that they’ll be coming down following the Federal Open Market Committee’s Dec. 12 and Dec. 13 meeting.

The housing market has also ditched pandemic-era price discounts in favor or jacked-up rents and mortgage rates that run the risk of pricing out consumers.

Asian households are the least likely to be grappling with the higher costs of living, as they held the most wealth overall from 2019 to 2020, Pew found.

Asian households’ net worth grew 43%, to $320,900, in the period — significantly more than the second-highest earners, white households, which posted a 23% increase, to $250,400.

Of the Asian households bringing in more than six figures per year between 2019 and 2020, the average high-earning families raked in $1.1 million.

The average high-earning white household in this period, meanwhile, brought in $923,300, Pew found.

Upper-income black and Hispanic households had a net worth of $285,000 and $350,000, respectively. 

The report excluded the poorest 1% and top 1% of earners from its rankings.

Among all American households’ assets, an owned home was the most valuable, accounting for about two-thirds of the median household’s net worth, according to Pew.

Homeownership rates were the highest among white households, followed by Asian, Hispanic and black households.

Asian households were the most likely to have investment and retirement accounts, though about 60% of all US households had at least one person with an individual retirement account or 401(k) come the end of 2021.

Though as Americans get hammered by inflation, balances in these savings accounts have plunged 4% in the latest fiscal quarter, attributed to an uptick in “hardship withdrawals.”

Fidelity Investments found that the typical 401(k) fell from $112,400 in the second quarter to $107,700 in the latest three-month period ended Sept. 30 — a drop of nearly $5,000.

Individual Retirement Account (IRA) balances experienced a similar drop, falling to $109,600 from $113,800 in the same time period, according to Fidelity.

Fidelity reported that 2.3% of workers took out what the IRS considers a “hardship withdrawal” — for large, unexpected payments — up from 1.8% in the year-ago period.

These withdrawals are subject to income tax, plus a potential additional 10% tax if they’re made before age 59.5 or aren’t used for medical bills, school tuition or home repairs, among other immediate financial needs.

Eight in 10 respondents cited inflation as reason for their financial stress.