The Federal Reserve just published data that could help explain why Americans have kept spending through economic turbulence and warnings of a possible recession. According to the Survey of Consumer Finances, American households saw a record 37% rise in their net worth between 2019 and 2022.

That trend was particularly pronounced for Black and Hispanic households, whose wealth grew by 61% and 47% respectively during the pandemic. Historically, the U.S. has had a wide and stubborn racial wealth gap. So what does this new data mean?

Most of that broad increase in American households’ net worth can be explained by one asset, said senior economist Kayla Bruun with Morning Consult. And, she said, home values went up a lot from 2019 to 2022. 

But there was no surge in Black or Hispanic homeownership during the pandemic. So why did those groups’ wealth grow so much faster than that of white and Asian households? 

Bruun pointed to the pandemic labor market. 

“Jobs growth was increasingly benefiting sort of those lower-wage sectors because that’s where more of the recovery was still taking place from the pandemic. Things like leisure and hospitality and food service,” she said.

Sectors where Black and Hispanic workers are overrepresented. 

Joanne Hsu, an economist at the University of Michigan, sees another explanation. 

“We also see increases in stock market participation for those two groups as well,” she said.

That enabled them to benefit when the markets rebounded from the brief recession in 2020. 

But some of the recent growth in Black and Hispanic wealth is a bit of an illusion. Since those households generally started with less wealth, small changes had a large impact. 

And the Fed’s report points out that despite faster wealth growth, the gap in absolute dollar value between Black and Hispanic households’ wealth and white households’ wealth actually widened during those years. 

“What we are seeing is the legacy of historical racism, discrimination and redlining,” said Vanessa Perry with the Urban Institute’s Housing Finance Policy Center. 

And current economic conditions won’t make a big dent in the problem, she said. “In fact, the homeownership rates were suppressed by the very appreciation that we’re talking about.”

That, Perry said, could help explain another of the Fed survey’s findings: Black and Hispanic households felt more uncertain about their future finances.