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‘A tale of two Americas’: How the pandemic is widening the financial health gap

Over two-thirds of Americans are financially unhealthy, with millions facing “extreme financial hardship,” according to the U.S. Financial Health Pulse Trends Report, released today. And as the stock market continues to strengthen, the average American is still struggling, with unemployment rates still far above pre-pandemic highs and another round of coronavirus stimulus seemingly far off.

“50 years ago, when wealth was more evenly distributed, the stock market fluctuations and performance might have been more reflective of how real people were faring. But given the significant disparities in wealth and the fact that a significant percentage of Americans don’t actually own any stock, it really doesn’t tell us very much.” Jennifer Tescher, president and CEO of the Financial Health Network, said. “This study really gives a picture of what people’s real financial lives look like.”

Though the study showed that 33% of Americans—4% more than in 2019—are financially healthy, the authors believe that increase is likely due to the stimulus passed in late March and other short-term recovery efforts, along with consumer behavior changes during the lockdowns of 2020. The improvement did occur across nearly all eight of the survey’s indicators of financial health, though: spending, bill payment, short-term and long-term savings, debt load, credit score, insurance coverage, and planning for the future.

But those positive results don’t tell the whole story.

“Financial health is an essential measure of Americans’ financial resilience, which has been put to the test by the global pandemic,” Tescher said in a press release. “Unfortunately, the results demonstrate that race, income and gender impact people’s ability to weather a shock, underscoring the need for investments and interventions in financial health equity.”

The gap along income was stark: The average financial health of households making over $100,000 yearly improved by 9%, while households making less than $30,000 saw no improvements at all.

When broken down by race, the study’s results showed that 39% of white people (up 5% since 2019), 39% of Asian people (up 2%), 24% of Latino people (up 4%) and just 15% of Black people (no change since 2019) were financially healthy. On top of that, Black and Latino people were far more likely to say that their debt is unmanageable (39%) than white people (23%).

These financial hardships come alongside many negative effects of the pandemic, like health complications and job loss, which also disproportionately target Black and Latino communities, Tescher said.

And though the pandemic is a huge contributor to the data this year, Black communities have long been severely disadvantaged financially in America. Years of systemic racism reflected in the lending market, the credit system, and other areas, have led to generational wealth for white families that families of color haven’t had the chance to develop, Tescher said. Read more via Fortune

Pemo Theodore

Pemo Theodore is a Media Publisher and a great people connector. She was Founder Silicon Valley TV which has served the San Francisco Bay Area for 10 years! She has produced Silicon Valley Events for Investors & Startups for 10 years. Pemo loves to video interview venture capitalists & founders to engage the human behind the success stories.. She has been Executive Producer of FinTech Silicon Valley for 6 years, organizing twice monthly FinTech talks & panels in San Francisco & Palo Alto and audio podcasts. She believes in learning through a great discussion with experts in the domains. Pemo has a talent to bring the right people together and is an incredible networker. Pemo's events have been seen as supporting Venture Capitalists & Angels in sourcing great deal flow from startups who attend her events. Many founders have received funding through meeting investors at her events. Her favored medium is audio & visual media and she has built up a great body of work of videos of panels & interviews and podcasts in Silicon Valley startup ecosystem. She has lived & worked in Canada, Australia, New Zealand, Ireland, London, Northern Ireland & Silicon Valley. Bio

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