Economic and racial inequalities are ‘long-term’ problems for the Federal Reserve


Federal Reserve says there is little it can do to address income and wealth disparities, but feels compelled to at least research the economic implications of uneven economic performance in the United States

The Fed own statistics confirm the division. In its 2019 Survey of Consumer Finances, white families would have had a median wealth level of $ 188,200, significantly higher than the median black family wealth level of $ 24,100.

Data from the 2019 Fed Survey of Consumer Finances, breaking down median net worth by race / ethnicity. (Credit: David Foster / Yahoo Finance)

The wealth growth rates of black and Hispanic families (33% and 65%, respectively) were faster than those of white families (3%) from 2016 to 2019.

“When we interact with people, most of the time we hear comments like ‘I didn’t know the Federal Reserve was interested in these issues’,” said Dionissi Aliprantis, director of the economic inclusion program at Federal Reserve Bank of Cleveland.

The Cleveland Fed recently commissioned Cleveland artists Chris Webb and Perris Mackey for a video highlighting the central bank’s reasons for studying racial inequalities in the U.S. economy.

The video highlights economic issues the program hopes to address, such as the ways in which discrimination (in education, the job market, housing and access to credit) further widens the wealth and income gaps. .

“These disparities are still rooted in systemic racism. It can be traced from employment to small business and wealth and still exists today in a way that is still hurting the health of our country, ”said Webb.

Maximum employment

Spoken poetry and the art of collage are not often associated with the central bank, which relies little on art to communicate its economic policies. The Fed uses interest rates and other policy tools to steer inflation and labor market conditions.

While Congress may be better suited to have a direct impact on education or housing policies, Aliprantis said the Fed’s mandate of “maximum employment” requires the central bank to at least pay attention to economic inequalities.

“We are trying to make it clear that we see ourselves as being in the long term, and we are committed to trying to understand and improve the situation,” Aliprantis said.

In other aspects, the Fed has more direct responsibility for monitoring discrimination. As the primary banking regulator, the Community Reinvestment Act demanded that the Fed ensure that a bank lends and invests in low and moderate income communities where it has a presence.

The Cleveland Fed is one of 12 regional outposts of the Federal Reserve, headquartered in Washington, DC The top Fed executive, President Jerome Powell, also stressed the need to seek out economic disparities – many of which have been exacerbated by the pandemic.

“The economic downturn has not affected all Americans the same, and those least able to shoulder the burden have been hit the hardest,” Powell said on Nov. 3.

Brian Cheung is a reporter covering the Fed, Economics and Banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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