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As More Americans Are Being Lifted Out of Poverty, the Racial Wealth Gap Persists

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Nearly one in four Americans say they lack the cash or savings to cover a $400 unexpected expense.

The Federal Reserve Board has asked Americans the same question every year since 2013: Can you afford an unexpected expense of $400? That $400 could be anything: a medical bill, car or home repair, a lost freelance gig. In previous years, a majority of Americans could not afford it. 

In 2013, 52 percent of respondents said they would not be able to cover this expense. The latest report, released this week, found that 39 percent of the 11,000 adults surveyed said they did not have enough cash or savings to cover the expense (27 percent would have to borrow money or sell something, and 12 percent would not be able to cover it all).

The $400 measure is a major touchpoint for how families in the United States actually get by week to week, but there are others: Overall, the report concludes that economic wellbeing is improving. However, it also finds that most of the Americans who are being lifted out of poverty—who can afford an extra $400 now and then, or pay off their monthly bills in full—are white. Here’s what this can tell us about the racial wealth gap. 

More Whites Report Being Financially ‘OK’ Than African Americans and Latinxs

The Federal Reserve applauded this minimal progress on Thursday, describing 2018 as “slightly better” than 2017. “We continue to see the growing U.S. economy supporting most American families,” Federal Reserve Board Governor Michelle Bowman said in a statement. Still, the report’s authors note that another year of economic expansion and low unemployment has done “little to narrow the persistent economic disparities by race, education, and geography.”

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