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Reproduced from the Federal Reserve Bank of Cleveland; Table: Axios Visuals

An oft-suggested reason for the massive wealth gap between Black and white families in the U.S. is that Black Americans simply don't save or invest enough. Data shows that is untrue.

What they're saying: A 2004 study by Maury Gittleman and Edward N. Wolff, using data from the Panel Study on Income Dynamics (PSID), tracked the financial position of Black and white families and found that if income is controlled, there is "a slight savings edge for Black households."

What's really happening: "The current racial wealth gap is the consequence of many decades of racial inequality that imposed barriers to wealth accumulation," the Cleveland Fed noted in a 2019 report.

  • And while white Americans' head start in amassing wealth plays some role in the wealth gap, the primary driver for its continued presence is "persistent systemic differences in economic opportunity."

Why it matters: "As of 2016, the most recent year for which data is available, you would have to combine the net worth of 11.5 Black households to get the net worth of a typical white U.S. household," the Washington Post wrote recently.

  • "The 2016 wealth gap is roughly the same as it was in 1962, two years before the passage of the Civil Rights Act of 1964, according to data from the Survey of Consumer Finances (SCF)," the Cleveland Fed wrote.

Yes, but: While Black families may save more, they tend to invest in lower risk assets that produce lower returns.

Yes, but, but: Even if Black investment patterns mirrored their white counterparts, that would close the wealth gap by just four percentage points, according to the 2004 study by Gittleman and Wolff.

Go deeper

"Corporate redlining" has cost Black neighborhoods millions

Illustration: Sarah Grillo/Axios

The number of SBA loans to Black-owned businesses has decreased 84% from its peak before the 2008 financial crisis, according to a new report from the Business Journals, citing lending data from the agency’s flagship 7(a) program. Overall 7(a) loans declined 53% during that time.

Why it matters: The precipitous decline in loans to Black-owned businesses, in particular, was despite 48% growth in the economy, a 101% increase in bank deposits and an 82% jump in commercial loans, the report notes.

Why the stimulus delay isn't a crisis (yet)

Illustration: Aïda Amer/Axios

If the impasse between House Speaker Nancy Pelosi and the White House on a new stimulus deal is supposed to be a crisis, you wouldn't know it from the stock market, where prices continue to rise.

  • That's been in no small part because U.S. economic data has held up remarkably well in recent months thanks to the $2 trillion CARES Act and Americans' unusual ability to save during the crisis.

Americans' trust in the Fed keeps falling

Data: Axios/Ipsos poll; Note: ±3.3% margin of error; Chart: Axios Visuals

Americans' trust in the Federal Reserve fell again in October, with just 34% saying they have a fair amount or a great deal of trust in the central bank in the latest Axios/Ipsos poll.

What's happening: While trust in the Fed rises with age, income level and among those who say they know more about the institution, there was not a single group where even half of respondents said they trusted the Fed.