By Ana Hernández Kent, Senior Researcher, Institute for Economic Equity; and Lowell R. Ricketts, Data Scientist, Institute for Economic Equity
The Institute for Economic Equity presents average real (i.e., inflation-adjusted) wealth for various demographic groups using the Federal Reserve Board’s Distributional Financial Accounts (DFAs).
Our team documents quarterly trends in average U.S. family wealth and wealth inequality from 1989 onward. The Real State of Family Wealth supplements our other research (e.g. Demographics of Wealth series), which generally uses median wealth instead of average wealth—producing different estimates of racial, generational and educational wealth gaps. (See the note on data sources below.) Because of how wealth is distributed, average wealth estimates are much higher than median wealth estimates, and are therefore not representative of a typical family’s experience.
Key Takeaways from Third Quarter 2020 (through Sept. 30):
The DFAs provided by the Board give quarterly estimates of nominal, aggregate U.S. household wealth. We make two important adjustments:
The result is average real household wealth values, available on a quarterly basis.
The authors would like to thank Ray Boshara and William R. Emmons for previous contributions to this work.
Racial and Ethnic Household Wealth Trends and Wealth Inequality
Generational and Age Household Wealth Trends and Wealth Inequality
Educational Household Wealth Trends and Wealth Inequality
We invite you to stay informed about quarterly updates to these figures by bookmarking this page, The Real State of Family Wealth, and signing up for updates.
A Note on Data Sources
The Federal Reserve Board creates the DFAs by combining data from the triennial Survey of Consumer Finances (SCF) and the quarterly Financial Accounts of the United States. See a paper by the Board of Governors of the Federal Reserve System for a discussion of how the estimates are constructed. Many of our reports, like the Demographics of Wealth series, use the SCF instead of the DFAs. The SCF is an extensive survey that allows us to examine median household wealth (wealth at the middle or 50th percentile), which we believe is more representative of a demographic group’s typical economic experience than is average wealth. However, the SCF is released only every three years, with the most recent survey featuring 2019 data.
While we prefer the depth of information provided by the SCF data, the DFAs allow us to study wealth trends in a more timely fashion, though with less flexibility than the SCF and an inability to examine median household wealth. Because specific DFA estimates change from quarter to quarter as data are updated, we advise placing more weight on trends than specific values. Overall, as average wealth trends roughly track median wealth trends, we find large wealth gaps and low levels of wealth among vulnerable groups using both the SCF and DFAs.
Last Update: January 22, 2021