Financial Expert On The Reason Black Wealth is On The Decline

Everyone has been talking about the newly released Federal Reserve study showing a dramatic drop in Black household wealth, but few have explained how it happened—or what can actually be done to fix it. To unpack the root causes and potential paths forward, The Root turned to Loren R. Douglass, a former Wall Street and General Electric executive.

Douglass points out that appreciating financial equities—like stocks and business ownership—have long been the core engine of American wealth, warning that heavy reliance on depreciating physical assets like vehicles and primary residences leaves Black families uniquely vulnerable. His analysis unlocks the mystery behind a new Center for Economic and Policy Research (CEPR) study of the Fed’s Survey of Consumer Finances, which exposes a stark divergence in how different racial groups fared over the last three years.

According to new information from the Federal Reserve, the already substantial wealth gap between Black Americans and other major racial groups has gotten even worse in the last several years. As outlined by the CEPR, the Fed’s 2025 Survey of Consumer Finances found that the median net worth of Black American households has fallen by 25 percent: from $49,100 in the year 2022, to $36,800 in 2025. More concerning is that even with Black Americans already having less wealth than other groups, the other major racial groups — White, Hispanic, and Asian Americans — all enjoyed increases in their net worth during that same time period. 

“The Fed’s detail says this wasn’t Black families borrowing more; it was the few things they own — homes, cars, and retirement accounts — losing value,” said Douglass, the founder of Harvey C. Russell Jr. Institute for International Business & Strategic Coalitions. “For the median family that’s about $12,000 gone, which was the cushion for a car repair or a month without a paycheck, or the collateral that would have backed a loan to start a business or help for a child or relative. Fewer Black households own anything at all than three years ago; more detailed data would tell us whether this is a bad stretch or the floor starting to collapse.”

As a result, Black households’ median wealth continues to fall under the national median. In 2022, Black households were $162,000 below the national median; after this year’s survey, that gap increased to $179,000. 

The survey leaves a lot of additional questions to get to the bottom of everything: why are the value of these items decreasing for Black people? Are homes, cars, and retirement accounts losing their value for other races as well, and stocks are just making up the extra space? Those answers aren’t determined yet, but as Douglass explained, tools of wealth like stocks are more prevalent for other races than they are for Black Americans. 

“Black family wealth is concentrated in homes and vehicles, and stock ownership runs around 39 percent for Black families versus about 66 percent for white families in the 2022 survey. Ownership has always been the pathway to security since the founding of the nation.”