Wealth Likely to Triple for US Hispanics by 2025, but Impact From Recession Still Lingers

The U.S. Hispanic population is on the rise, and so is Hispanic-owned wealth.

By 2050, the Hispanic population in the U.S. will double, and by 2025 the wealth owned by Hispanic families will likely triple if trends from the past two decades hold. The majority of gains will occur because of the influx in population, but a fraction of the increase will be due to the rapid growth of average household wealth.

Hispanic families will own somewhere between $2.5 trillion to $4.4 trillion of overall U.S. wealth by 2025 (2.6 to 3.2 percent of the United States' wealth). That will show a significant increase from 2010's $1.4 trillion (2.2 percent of the nation's income, property, and financial assets), explained a study released by the Federal Reserve Bank of St. Louis.

Despite this, most Hispanic families will remain less wealthy than white and Asian families, their share of the wealth continuing to be disproportionately small. The group's share of the wealth will lag far behind the population's share; at the same time, the median wealth of Hispanic families will rise faster than the overall population. Hispanic families lost nearly one-third of their net worth in the wake of the recession.

Between 2007 and 2010, Hispanic families suffered a 39 percent decline in household wealth. White families experienced less loss than minority families, partly because white families have less of their funds tied into home equity and claim a variety of assets.

The average wealth was lower for the 50.5 million U.S. Hispanics in 2010, and wealth owned by Hispanic families ($108,871) was lower than that owned by non-Hispanics ($543,702).

By national standards, Hispanics families will gain wealth, but still won't be well off. Wealth will accumulate as the group grows rather than from per-capita increases in wealth alone. Racial wealth disparities will likely continue to widen.

Researchers question whether the large wealth losses experienced by Hispanic families between 2007 and 2010 will be "permanent," or if Hispanics will be able to accumulate wealth and return to the trend of improved average wealth.

One assumption presumes that the average wealth of Hispanics will revert back to trends seen between 1989 and 2010, showing faster growth of average wealth. The alternative assumption projects that the average level of wealth in 2010 will grow from crisis-impact levels, showing permanent wealth loss because there would be no "catch-up" period.

Based on those assumptions, Hispanic wealth will be between $2.5 trillion and $4.4 trillion, 3.2 percent of the nation's wealth under optimistic projections. The fast growth scenario suggests that Hispanic families will have 26.5 percent of average American family wealth in 2025, up from 2010's 22 percent.

Both promising and uncertain, the projections are just that, clarified the report's authors, William Emmons and Bryan Noeth, who cautioned that the figures are uncertain. They also shared that the median wealth for U.S. Hispanics will show a slow but steady increase.