Using data from the Survey of Consumer Finances, I find that the ratio in standard net
worth NW between African-Americans and (non-Hispanic) whites was the same in 2007 as in
1983 (0.19) but then fell to 0.14 in 2016. The wealth ratio between Hispanics and non-Hispanic
whites climbed considerably between 1983 and 2007, from 0.16 to 0.26, but then plunged to 0.19
in 2016. One of the most striking differences between minorities and whites was the very high
leverage (debt-net worth ratio) of the former. On the eve of the Great Recession, it was 0.55 for
blacks, 0.51 for Hispanics, and just 0.18 for whites. Both minorities also had a higher share of
their assets in homes than whites (54 and 53 percent, compared to 31 percent). The
homeownership rate among African-American families climbed from 44.2 percent in 1983 to
50.1 percent in 2004 but then fell off to 44.0 percent in 2016, while that of Latino families, went
up from 32.6 to 49.2 but then tumbled to 45.4 percent. Decomposition analysis reveals that the
lower rate of return on wealth held by minorities relative to whites explained a large share of the
widening of the wealth gap between 2007 and 2010. From 2010 to 2016, the rate of return was
higher for minorities than whites but this was offset by larger dissavings.
