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New Report From Cleveland Fed Shows the Wealth, Income Gaps Between Black and White Families

photo of Cleveland Federal Reserve Bank
Researchers at the Federal Reserve Bank of Cleveland say wealth gap is being driven by the income gap, which researchers don't always connect together.

A new report from the Federal Reserve Bank of Cleveland shows that for the past half century, the wealth gap between white and black households has increased – and that’s due to several factors.

The study shows that in 2016, the wealth of black households was, on average, about $140,000. In white households it was more than $900,000. Research Economist Daniel Carroll co-authored the report with Dionissi Aliprantis, and says the gap is mostly being driven by a disparity in incomes – something he says researchers have not always grasped.

“Wealth is a stock; it’s something that you build up. Income is what we call a flow; it’s something that arrives at a given rate," said Carroll. "We’re trying to sort of re-start the conversation on that. I wouldn’t say it’s been dismissed, but I think we have to kind of refocus it a little bit.”

Carroll adds that the gap is also driven to an extent by things like the types of investments and their rates of return as well as people’s inheritances.

The entire Federal Reserve Bank of Cleveland report is available here.

Kabir Bhatia is a senior reporter for Ideastream Public Media's arts & culture team.