Hispanic Wealth Could Triple by 2025

Population growth will drive the trend, according to a report from the St. Louis Fed. The average Hispanic family likely still won’t see many gains.

National Journal
Sophie Quinton
July 1, 2014, 1 a.m.

The total net worth of His­pan­ic house­holds might reach $4.4 tril­lion by 2025, ac­cord­ing to a new re­port from the Fed­er­al Re­serve Bank of St. Louis. But the re­port pre­dicts that much of that growth will be driv­en by the grow­ing num­ber of His­pan­ic house­holds — not by the grow­ing wealth of the av­er­age fam­ily.

His­pan­ic men and wo­men made up about 16 per­cent of the U.S. pop­u­la­tion in 2010, and held $1.4 tril­lion dol­lars of over­all wealth. That’s just 2.2 per­cent of the na­tion’s in­come, prop­erty, and fin­an­cial as­sets, ac­cord­ing to the re­port. By 2050, the His­pan­ic pop­u­la­tion will al­most double, but the share of wealth His­pan­ics hold will likely re­main dis­pro­por­tion­ately small.

The re­ces­sion widened the wealth gap between white and His­pan­ic fam­il­ies. His­pan­ic fam­il­ies lost al­most one-third of their net worth between 2007 and 2010. While white fam­il­ies were also hard hit, the av­er­age white fam­ily lost a smal­ler share of its total wealth than the av­er­age minor­ity fam­ily, partly be­cause white fam­il­ies ten­ded to hold more types of as­sets and to have less money tied up in home equity.

The re­port’s au­thors, Wil­li­am Em­mons and Bry­an No­eth, made two pro­jec­tions for house­hold wealth in the fu­ture. In the more op­tim­ist­ic scen­ario, they cal­cu­lated that house­holds would quickly re­bound from the re­ces­sion and re­vert to the long-term growth trends ob­served from 1989 to 2010. In the less op­tim­ist­ic scen­ario, they as­sumed no such re­bound. The au­thors cau­tioned that their pro­jec­tions were, well, pro­jec­tions, and thus un­cer­tain.

“In the more pess­im­ist­ic scen­ario, the His­pan­ic share of total wealth would in­crease only be­cause the His­pan­ic pop­u­la­tion is ex­pec­ted to grow faster,” they wrote. Un­der the more op­tim­ist­ic scen­ario, His­pan­ic wealth would grow to $4.4 tril­lion; un­der the less op­tim­ist­ic pro­jec­tion, it would grow to $2.5 tril­lion.

Yet even un­der the re­port’s more op­tim­ist­ic pro­jec­tion, His­pan­ic house­holds would hold just 3.2 per­cent of the na­tion’s wealth. Wealth ac­cu­mu­la­tion for all house­holds would also widen ra­cial wealth dis­par­it­ies, if past trends con­tin­ue. Un­der the fast growth scen­ario, His­pan­ic fam­il­ies would pos­sess 26.5 per­cent of the av­er­age Amer­ic­an fam­ily’s wealth in 2025, up from 22 per­cent in 2010. In oth­er words, even if everything goes well and the av­er­age His­pan­ic fam­ily gains wealth, by na­tion­al stand­ards they still wouldn’t be well off.

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