New data shows that wealth-building assets for Black Americans and families, including family-owned businesses and stocks, grew steadily over three years.
According to the Federal Reserve’s 2022 Survey of Consumer Finances, the latest snapshot of changes in household income, net worth assets, and other metrics for Americans, the largest rise for Blacks came from entrepreneurship. The number of Black families that reported owning a business climbed to 11% in 2022, doubling from 4.8% in 2019.
For stocks, around 39% of Black families disclosed ownership of such equities in 2022 versus nearly 34% in 2019. The Fed says that was the biggest gain since 2007.
Regarding homeownership, around 46% of Black families stated owning a residence, up from 45% in 2019. Though a small gain, the number is advancing again after reaching 49% in 2007.
William Michael Cunningham, an economist and owner of Creative Investment Research, said Black ownership has increased dramatically due in part to the impact of COVID-19, according to the report. He said African Americans, working away from traditional offices, had more time to consider becoming entrepreneurs. Based on a calculated analysis by his firm, Cunningham said Black families reporting business ownership reached about 1.7 million in 2022, a whopping gain from 878,000 in 2019.
He added that many Black Americans may have used the extra time to expand side hustle businesses, with some even making them full-time jobs. He said COVID gave African Americans more time to reflect on their lives. He said this included people considering whether their primary employer really valued them and the Black community after the George Floyd murder and subsequent national protests. He said those sentiments could have prompted Blacks to launch businesses.
Further, Black business ownership may have risen as more people obtained financing in recent years as lending from the Paycheck Protection Program run by the U.S. Small Business Administration and other programs led to an increased ability to get some level of financing.
“This was made even more attractive due to the fact that business-owning families in 2022 were wealthier than non-business-owning families.”
Another bright spot from the survey was rising stock ownership for Blacks. That came as “direct ownership of stocks increased markedly between 2019 and 2022—from 15% of families to 21%, based on Fed data. The survey said that was the largest change on record.
“Market conditions were good, with positive gains over the period. In addition, there were more paths to stock ownership, including IRAs, retirement plans, and mutual funds, with more and easier ways to purchase mutual funds,” Cunningham said.
Regarding homeownership, Cunningham said more work needs to be done by public and private sector institutions to make a meaningful change in Black homeownership. However, he said the Fed’s latest numbers show improvement in that category.
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