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Hispanic Population's Share of Wealth Likely to Increase by 2025

Hispanic Population's Share of Wealth Likely to Increase by 2025

Posted by Liliana Castaño on July 07, 2014

By William R. Emmons and Bryan J. Noeth

Wealth owned by Hispanic families would triple in inflation-adjusted terms by 2025 if wealth-building trends observed during the past two decades resume. This would raise the share of total wealth owned by Hispanics to a new high. However, most Hispanic families would remain far less wealthy than white and Asian families. A substantial portion of the increased wealth would result from the Hispanic population growing faster than other groups, rather than from per-capita increases in wealth alone. And there is reason to be cautious about extrapolating previous wealth trends far into the future. Thus, the wealth outlook for Hispanic families is promising but far from certain.

Hispanic Families Are Less Wealthy Than Average, but Gaining

The U.S.'s Hispanic population was about 50.5 million in 2010, representing 16.3 percent of the total population. According to the Federal Reserve's Survey of Consumer Finances and its Financial Accounts of the United States, Hispanic families had about $1.4 trillion of net worth (wealth) in 2010, representing about 2.2 percent of total wealth. The share of total wealth owned by Hispanic families was lower than their share in the population because average wealth per Hispanic household was only $108,871, compared to average household wealth of $543,702 among all non-Hispanic families.3 Table 3 shows that the average wealth of all households was $494,916 in 2010.

Using census projections of population growth through 2025 and two different assumptions about the trajectory of wealth gains between 2010 and 2025, we estimate that Hispanic families will own between $2.5 trillion and $4.4 trillion of wealth in 2025.4 This would represent between 2.6 percent and 3.2 percent of total U.S. wealth. We estimate that the majority of the gain will be due to faster population growth, but a small increase may occur due to faster growth of average household wealth.

Our two different assumptions address the uncertainty regarding whether the large wealth losses experienced between 2007 and 2010 will prove to be "permanent," in the sense that subsequent wealth gains are, or are not, unusually rapid for a time. This is particularly important for Hispanic families, who suffered above-average wealth losses during the most recent recession.

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