Economic Policy

Pessimism and Hope A Survey of the Financial Status and Aspirations of Black Americans

 

For the report, Pessimism and Hope: A Survey of the Financial Status and Aspirations of Black Americans, the Joint Center for Political and Economic Studies and NORC at the University of Chicago partnered to better understand the financial status and aspirations of Black Americans, as well as Black Americans’ perceived barriers to realizing those aspirations. This research is especially timely as Black Americans work to achieve a full recovery from the national economic implosion caused by COVID-19. This project is unique in that it took a community-centered approach to ensure that both the content of the survey and the implications of the findings would be maximally relevant for Black Americans. To fully capture the lived experiences of Black Americans as it relates to these topics, the Joint Center and NORC worked to ensure that this project was built both from the ground up and from the top down. The final design was a four-stage project. In the first stage of research, the Joint Center interviewed several scholars to identify research gaps and potential methodological approaches to better understand the economic well-being and aspirations of Black households. In the second stage, the Joint Center convened scholars, grassroots and grasstops activists, and advocates to help narrow the scope of the project and inform the research agenda. Next, NORC conducted a series of focus groups with Black Americans from across the country, socioeconomic spectrum, and age groups to ensure that the content of the survey reflected their full range of experiences. The survey data was collected in the fall of 2022. Following survey data collection, we convened another series of focus groups with survey respondents to ensure that we were able to give voice to the lived experiences that were reflected in the data.

MAJOR FINDINGS

Current Financial Situation

  • Black Americans have widely varied views of their financial situations
    About one in five Black Americans report that their financial situation is poor, about a third report that their financial situation is neither good nor bad, and the remaining 45 percent report that their financial situation is good. This is closely related to income and education; respondents earning more than $60,000 per year or those with college degrees are more likely to say that their financial situation is good. Just over a third of Black Americans (34 percent) report that “just getting by financially” describes their situation well, and nearly one in three (28 percent) say that it doesn’t describe their situation at all.
  • Black Americans are not seeing their finances improve in the current recovery
    Most Black Americans’ financial situation has either gotten worse (30 percent) or stayed the same (44 percent) over the last year.
  • Black Americans remain optimistic about their financial futures, with two-thirds being somewhat or very optimistic about their financial futures.
  • Black Americans don’t have a large savings cushion
    Only about four in 10 Black Americans could cover three months of expenses with their current savings, and only a quarter of Black Americans (25 percent) express a great deal of confidence that they could handle an unexpected expense of $1,000.
  • Black Americans are not confident in their ability to finance their retirement
    Only around one in five Black Americans (21 percent) are somewhat or very confident that they will be able to finance their retirement.
  • Most Black Americans are able to pay their bills on time
    Sixty percent of Black Americans report paying all their bills on time, and nearly two-thirds (64 percent) report having money left over at the end of the month at least some of the time.
  • Medical costs are a significant barrier to proper medical care for some Black Americans
    Around a quarter of Black Americans have skipped a medical test or treatment (22 percent), failed to fill a prescription (23 percent), or failed to get medical care for a condition (24 percent) because of cost.
  • Most Black Americans rent their home
    Fifty-six percent of Black Americans rent, rather than own, their home. This proportion rises to nearly three-fourths (73 percent) for Black Americans who make less than $30,000 per year. The proportion of renters is also higher in the Northeast (68 percent) than in other regions of the country. Around six in 10 Black Americans (59 percent) think that it would be somewhat or very difficult to get a mortgage to buy a home. The cost of a down payment or closing costs and poor credit were the most frequently cited reasons for not being able to easily get a home mortgage.

Debt and Credit

  • Black Americans have a wide variety of debt and most carry debt of some kind
    More than half of Black Americans (57 percent) have credit card debt, about a third (32 percent) have student loan debt, and over a quarter (28 percent) have mortgage debt. A third of Black Americans (33 percent) report having more debt than is manageable.
  • Black Americans have a wide range of credit scores
    Three in 10 Black Americans (30 percent) report having a credit score that is good or very good, and around four in 10 (39 percent) report having a credit score that is bad or very bad. Credit scores vary substantially with income, with nearly half of Black Americans who make $60,000 or more annually report having a good or very good credit score; only 16 percent of Black Americans who make $30,000 or less per year report having good or very good credit scores.
  • Black Americans have nearly even sentiments on their ability to be approved or not approved for a credit card
    Just over a third of Black Americans (36 percent) have been turned down for credit in the last year, and about the same proportion (37 percent) are not at all or not very confident that they would be approved for a credit card if they applied for one. However, nearly a third (32 percent) are very confident that they would be approved for a credit card if they applied for one.

Financial Aspirations and Perceived Barriers

  • Most Black Americans’ financial aspirations revolve around relatively immediate goals
    Eight in 10 Black adults (80 percent) view things like not having to worry about monthly bills, not living paycheck to paycheck, having enough savings to handle an emergency, and being debt-free as very important to their financial goals.
  • Longer-term goals are rated as very important or absolutely critical by smaller proportions of Black Americans
    Around three in four (73 percent) say that saving enough for a comfortable retirement is a very important or absolutely critical goal; less than two-thirds (63 percent) report leaving assets for their dependents as very important or absolutely critical.
  • Black Americans are optimistic about their futures
    Two-thirds of Black Americans (66 percent) say that they are at least somewhat confident that they will have enough money to take care of their basic expenses during their retirement, whereas 34 percent express that they are not very confident or not confident at all. Similarly, 60 percent of Black Americans report that they are at least somewhat confident that they are doing a good job financially preparing for their retirement.
  • Nearly four in 10 Black Americans (38 percent) are particularly concerned with the possibility of Social Security payments being cut back, which poses a major risk for many people’s retirement security.
  • The most frequently cited barriers to achieving financial aspirations are related to the current economy
    High inflation, not having enough money to start investing, and high interest rates were the most frequently cited barriers.
  • Nearly a quarter of Black Americans (23 percent) cited the lack of employer benefits as a significant barrier to achieving their financial aspirations