How COVID-19 Has Impacted Black-White Financial Inequality
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How COVID-19 Has Impacted Black-White Financial Inequality



Black-White Financial Inequality

How COVID-19 Impacted Black-White Financial Inequality

COVID-19 has disrupted everything from economic markets to personal finances, but not everyone feels its effects equally. When compared with White Americans, Black Americans’ financial situations have been disproportionately affected by the pandemic.

In this infographic from McKinsey & Co., we outline the financial vulnerabilities of Black Americans, their increased usage of financial services since the onset of the pandemic, and their lower satisfaction levels with those services.

Financial Vulnerabilities of Black Americans

Compared to White Americans, more Black Americans say their job and income have been negatively impacted by COVID-19.

 My job has been negatively impacted by COVID-19My income has been negatively impacted by COVID-19
White Americans29%24%
Black Americans36%31%

Looking forward, Black Americans also report greater job security concerns and have less savings to protect themselves financially. In the event of a job loss, 57% of Black Americans report their savings would last four months or less, compared with 44% of White Americans.

With less of a cash buffer on hand, Black consumers are also more likely to have missed a recent bill payment.

 Skipped at least 1 paymentPartially paid at least 1 billPaid in full
White Americans16%22%62%
Black Americans51%22%27%

This includes being unable to pay for basic items such as utilities, telephone and internet, and mortgage payments.

How do they begin to manage these challenges?

Use of Financial Services

Black Americans increased their use of financial services more than White Americans.

Banking activities in the past two weeks, per March-June 2020 surveys

 Withdrew cashDeposited cashDeposited checksContacted bank for service on accountOpened new accountsReceived advice on digital tool usage
White Americans35%20%40%9%3%4%
Black Americans47%31%30%15%7%7%

For example, Black Americans were about twice as likely to request account service, open an account, or receive advice on digital tools. In addition, Black families were more likely to leverage a fintech platform and have been more active in opening fintech accounts since the start of the COVID-19 crisis.

However, as Black Americans seek out more financial help, some are not happy with the service they receive.

Satisfaction with Financial Services

Overall, Black families are less satisfied than White families across all types of financial activities. These differences were most pronounced for digital tool advice, where 38% of Black Americans were dissatisfied or very dissatisfied, compared with just 12% of White Americans.

Even though Black people were less satisfied with banking services, they were more likely to say that bank performance was above their expectations. This may suggest that expectations are lower for Black families than they are for White families.

Black Americans were also much less likely to trust their financial advisor.

 Do not trust/losing trustIndifferentGaining trust/trust
White Americans10%9%81%
Black Americans32%9%59%

From March-June 2020, the percentage of Black people distrusting their advisors rose from 12% to 32%. Over the same time period, White people’s distrust of financial advisors remained stable at 10%.

A notable exception: White and Black Americans were both satisfied with fintech providers. Only 5% of White Americans and 8% of Black Americans expressed some level of dissatisfaction with fintech companies.

Time to Examine the Financial System?

COVID-19 has perpetuated Black-White financial inequality. Data shows that Black families are more likely to be financially vulnerable, and increase their use of financial services during the COVID-19 crisis. However, they are less likely to feel satisfied with these services.

Financial institutions can urgently review their remote and in-person customer service procedures to ensure the needs of all families are being met.

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Comparing the Speed of U.S. Interest Rate Hikes (1988-2022)

The effective federal funds rate has risen more than two percentage points in six months. How does this compare to other interest rate hikes?



Line chart comparing the speed of interest rate hikes over cycles since 1988. The 2022 cycle is the fastest with the effective federal funds rate rising 2.36 percentage points in six months.

Comparing the Speed of U.S. Interest Rate Hikes

As U.S. inflation remains at multi-decade highs, the Federal Reserve has been aggressive with its interest rate hikes. In fact, rates have risen more than two percentage points in just six months.

In this graphic—which was inspired by a chart from Chartr—we compare the speed and severity of the current interest rate hikes to other periods of monetary tightening over the past 35 years.

Measuring Periods of Interest Rate Hikes

We used the effective federal funds rate (EFFR), which measures the weighted average of the rates that banks use to lend to each other overnight. It is determined by the market but influenced by the Fed’s target range. We considered the starting point for each cycle to be the EFFR during the month when the first rate hike took place.

Here is the duration and severity of each interest rate hike cycle since 1988.

Time PeriodDuration 
Total Change in EFFR
(Percentage Points)
Mar 1988 - May 198914 3.23
Feb 1994 - Feb 1995122.67
Jun 1999 - May 2000111.51
Jun 2004 - Jun 2006243.96
Dec 2015 - Dec 2018362.03
Mar 2022 - Sep 2022 62.36

* We considered a rate hike cycle to be any time period when the Federal Reserve raised rates at two or more consecutive meetings. The 2022 rate hike cycle is ongoing with data as of September 2022.

The 2022 rate hike cycle is the fastest, reaching a 2.36 percentage point increase nearly twice as fast as the rate hike cycle of ‘88-‘89.

On the other hand, the most severe interest rate hikes occurred in the ‘04 – ‘06 cycle when the EFFR climbed by almost four percentage points. It took much longer to reach this level, however, with the hikes taking place over two years.

Timing Interest Rate Hikes

Why are 2022’s interest rate hikes so rapid? U.S. inflation far exceeds the Fed’s long-term target of 2%. In fact, when the hikes started in March 2022, inflation was the highest it’s ever been in the last six rate hike cycles.

Time PeriodInflation Rate at Start of Cycle
Mar 1988 - May 19893.60%
Feb 1994 - Feb 19952.06%
Jun 1999 - May 20001.40%
Jun 2004 - Jun 20062.89%
Dec 2015 - Dec 20180.30%
Mar 2022 - Sep 2022 6.77%

Inflation rate is the year-over-year change as measured by the Personal Consumption Expenditures (PCE) Index.

In contrast, three of the rate hike cycles started with inflation at or below the 2% target. Inflation was just 0.30% in December 2015 when the Fed announced its first rate hike since the global financial crisis.

Some criticized the Fed for raising rates prematurely, but the Fed’s rationale was that it can take up to three years or more for policy actions to affect economic conditions. By raising rates early and gradually, the Fed hoped to avoid surging inflation in the future.

Fast forward to today, and the picture couldn’t look more different. Inflation exceeded the 2% target for 12 months before the Fed began to raise rates. Initially, the Fed believed inflation was “transitory” or short-lived. Now, inflation is a top financial concern and there is a risk that it has gathered enough momentum that it will be difficult to bring down.

Balancing Inflation and Recession Risks

The Fed expects to raise its target rate to around 4.4% by the end of 2022, up from the current range of 3-3.25%. However, they don’t foresee inflation reaching their 2% target until 2025.

In the meantime, the rapid interest rate hikes could lead to an economic downturn. Risks of a global recession have increased as other central banks raise their rates too. The World Bank offers policymakers a number of suggestions to help avoid a recession:

  • Central banks can communicate policy decisions clearly to secure inflation expectations and, hopefully, reduce how much they need to raise rates.
  • Governments can carefully withdraw fiscal support, develop medium-term spending and tax policies, and provide targeted help to vulnerable households.
  • Other economic policymakers can help relieve supply pressures through various measures. For instance, they can introduce policies to increase labor force participation, enhance global trade networks, and bring in measures to reduce energy consumption.

Will policymakers heed this advice and, if so, will it prove sufficient to avoid a global recession?

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Mapped: The 3 Billion People Who Can’t Afford a Healthy Diet

More than three billion people across the globe are unable to afford a healthy diet. See which countries are most affected.



The 3 Billion People Who Can’t Afford a Healthy Diet

While they aren’t often the focus of news media, hunger and undernourishment are problems plaguing millions of people every day.

According to the UN Food and Agriculture Organization (FAO), more than 3 billion people could not afford a healthy diet in 2020, an additional 112 million more people than in 2019. The increase was partly because of rising food prices, with the average cost of a healthy diet rising by 3.3% from 2019 levels.

As of August 2022, the FAO food price index was up 40.6% from average 2020 levels. Unless income levels increased by a similar magnitude, the healthy diet crisis is likely to have worsened, especially in low-income countries experiencing rampant food inflation.

Using data from the FAO, the above infographic maps the share of people unable to afford a healthy diet in 138 different countries as of 2020 (latest available data).

The Cost and Affordability of a Healthy Diet

According to the FAO, a healthy diet is one that meets daily energy needs as well as requirements within the food and dietary guidelines created by the country.

The (un)affordability is measured by comparing the cost of a healthy diet to income levels in the country. If the cost exceeds 52% of an average household’s income, the diet is deemed unaffordable.

Here’s a look at the share of populations unable to afford a healthy diet, and the cost of such a diet around the world:

CountryPercent of population unable to afford a healthy dietCost of Healthy Diet (USD per Person per Day)
Burundi 🇧🇮97.2%$2.9
Madagascar 🇲🇬97.0%$3.2
Liberia 🇱🇷96.8%$3.9
Malawi 🇲🇼96.6%$3.1
Nigeria 🇳🇬95.9%$4.1
Central African Republic 🇨🇫95.1%$3.6
Guinea 🇬🇳94.9%$4.1
Angola 🇦🇴94.3%$4.5
Congo 🇨🇬92.4%$3.4
Sudan 🇸🇩91.8%$4.3
Mozambique 🇲🇿91.5%$3.2
Democratic Republic of Congo 🇨🇩90.0%$2.1
Sierra Leone 🇸🇱89.2%$2.9
Niger 🇳🇪88.8%$2.9
Zambia 🇿🇲88.0%$3.3
Tanzania 🇹🇿87.6%$2.7
Guinea-Bissau 🇬🇼87.2%$3.5
Ethiopia 🇪🇹86.8%$3.4
Rwanda 🇷🇼86.3%$2.7
Haiti 🇭🇹85.9%$4.5
Sao Tome and Principe 🇸🇹84.7%$3.6
Nepal 🇳🇵84.0%$4.4
Lesotho 🇱🇸83.5%$4.3
Pakistan 🇵🇰83.5%$3.7
Chad 🇹🇩83.4%$2.8
Benin 🇧🇯82.9%$3.7
Uganda 🇺🇬82.2%$2.7
Kenya 🇰🇪81.1%$3.0
Burkina Faso 🇧🇫80.1%$3.3
Laos 🇱🇦79.8%$4.1
Mali 🇲🇱74.3%$3.1
Bangladesh 🇧🇩73.5%$3.1
Egypt 🇪🇬72.9%$3.4
Eswatini 🇸🇿71.8%$3.4
India 🇮🇳70.5%$3.0
Indonesia 🇮🇩69.1%$4.5
Philippines 🇵🇭68.6%$4.1
Jamaica 🇯🇲66.2%$6.7
South Africa 🇿🇦65.2%$4.3
Myanmar 🇲🇲65.1%$4.2
Gambia 🇬🇲64.0%$3.1
Djibouti 🇩🇯63.9%$3.1
Botswana 🇧🇼61.4%$3.7
Ghana 🇬🇭61.2%$4.0
Cameroon 🇨🇲60.7%$2.8
Mauritania 🇲🇷60.7%$3.7
Fiji 🇫🇯60.4%$3.9
Suriname 🇸🇷58.8%$5.7
Namibia 🇳🇦56.8%$3.5
Bhutan 🇧🇹53.0%$5.0
Mongolia 🇲🇳51.4%$5.1
Honduras 🇭🇳51.3%$3.5
Iraq 🇮🇶49.6%$3.5
Kyrgyzstan 🇰🇬49.6%$3.2
Sri Lanka 🇱🇰49.0%$3.9
Senegal 🇸🇳46.0%$2.3
Guyana 🇬🇾43.0%$4.9
Armenia 🇦🇲42.9%$3.2
Tajikistan 🇹🇯42.1%$3.5
Cabo Verde 🇨🇻38.1%$3.6
Belize 🇧🇿36.4%$2.1
Gabon 🇬🇦36.3%$3.6
Nicaragua 🇳🇮35.7%$3.3
Algeria 🇩🇿30.2%$3.8
Vietnam 🇻🇳30.0%$4.1
Colombia 🇨🇴26.5%$3.1
Mexico 🇲🇽26.3%$3.3
Bolivia 🇧🇴24.7%$3.8
Palestine 🇵🇸23.1%$3.4
Ecuador 🇪🇨21.4%$2.9
Saint Lucia 🇱🇨20.6%$3.6
Peru 🇵🇪20.5%$3.3
Iran 🇮🇷20.3%$3.6
Tunisia 🇹🇳20.3%$3.6
Albania 🇦🇱20.1%$4.2
Brazil 🇧🇷19.0%$3.1
Dominican Republic 🇩🇴18.3%$3.9
Panama 🇵🇦18.2%$4.5
North Macedonia 🇲🇰18.0%$3.4
Paraguay 🇵🇾17.8%$3.5
Montenegro 🇲🇪17.5%$3.5
Thailand 🇹🇭17.0%$4.3
Costa Rica 🇨🇷16.8%$4.1
Morocco 🇲🇦16.7%$2.8
Serbia 🇷🇸16.3%$4.2
Jordan 🇯🇴14.9%$3.6
Mauritius 🇲🇺13.5%$3.6
China 🇨🇳12.0%$3.0
Trinidad and Tobago 🇹🇹11.6%$4.2
Romania 🇷🇴8.8%$3.2
Bulgaria 🇧🇬8.5%$4.1
Seychelles 🇸🇨6.8%$3.8
Moldova 🇲🇩6.7%$2.8
Chile 🇨🇱3.8%$3.4
Croatia 🇭🇷3.8%$4.3
Bosnia and Herzegovina 🇧🇦3.7%$4.0
Uruguay 🇺🇾3.6%$3.4
Russia 🇷🇺3.5%$3.4
Greece 🇬🇷3.2%$3.1
Italy 🇮🇹2.9%$3.1
Japan 🇯🇵2.5%$5.8
Hungary 🇭🇺2.0%$3.5
Spain 🇪🇸2.0%$2.8
Malaysia 🇲🇾1.9%$3.5
Latvia 🇱🇻1.8%$3.2
South Korea 🇰🇷1.7%$5.2
United States 🇺🇸1.5%$3.4
Maldives 🇲🇻1.4%$3.9
Estonia 🇪🇪1.3%$3.3
Kazakhstan 🇰🇿1.2%$2.7
Lithuania 🇱🇹1.2%$3.1
Slovakia 🇸🇰1.2%$3.2
Israel 🇮🇱1.0%$2.5
Poland 🇵🇱1.0%$3.2
Austria 🇦🇹0.8%$3.0
Australia 🇦🇺0.7%$2.6
Canada 🇨🇦0.7%$3.0
Malta 🇲🇹0.7%$3.8
Sweden 🇸🇪0.6%$3.3
Portugal 🇵🇹0.5%$2.7
United Kingdom 🇬🇧0.5%$1.9
Denmark 🇩🇰0.4%$2.5
Norway 🇳🇴0.4%$3.5
Cyprus 🇨🇾0.3%$3.0
Belarus 🇧🇾0.2%$3.3
Belgium 🇧🇪0.2%$3.1
Germany 🇩🇪0.2%$3.0
Netherlands 🇳🇱0.2%$3.0
Finland 🇫🇮0.1%$2.7
France 🇫🇷0.1%$3.2
Ireland 🇮🇪0.1%$2.2
Luxembourg 🇱🇺0.1%$2.7
Slovenia 🇸🇮0.1%$3.1
Azerbaijan 🇦🇿0.0%$2.5
Iceland 🇮🇸0.0%$2.4
Switzerland 🇨🇭0.0%$2.7
United Arab Emirates 🇦🇪0.0%$3.1
World 🌎42.0%$3.5

In 52 countries, more than half of the population cannot afford a healthy diet. The majority of these are in Africa, with the rest located across Asia, Oceania, and the Americas.

By contrast, in four countries—Azerbaijan, Iceland, Switzerland, and the UAE—everyone is able to afford a healthy diet. The picture is similar for most European and developed high-income countries, where more than 95% of the population can afford a healthy diet.

When the percentages are translated into numbers, Asia contains the most number of people unable to afford a healthy diet at 1.89 billion, of which 973 million people are in India alone. Another 1 billion people are in Africa, with around 151 million people in the Americas and Oceania.

While hunger is a worldwide concern, it is particularly acute in African countries, which cover all of the top 20 spots in the above table.

Africa’s Deepening Food Crisis

In many countries across sub-Saharan Africa, more than 90% of the population cannot afford a healthy diet.

Sub-Saharan Africa is particularly susceptible to extreme climate events and the resulting volatility in food prices. Roughly one-third of the world’s droughts occur in the region, and some sub-Saharan countries are also heavily reliant on imports for food.

Russia’s invasion of Ukraine has deepened the crisis, with many African countries importing over 50% of their wheat from the two countries in conflict. The rising food prices from this supply chain disruption have resulted in double-digit food inflation in many African nations, which means that more people are likely to be unable to afford healthy diets.

The Horn of Africa region at the Eastern tip of Africa is particularly in turmoil. All the countries in the region are reliant on wheat from Russia and Ukraine, with Eritrea (100%) and Somalia (>90%) high up in the import dependency chart. Additionally, the region is facing its worst drought in 40 years alongside ongoing political conflicts. As a result, 22 million people are at risk of starvation.

Population Growth and Food Insecurity

In November of 2022, the global population is projected to surpass 8 billion people, and many of the fastest growing countries are also food-insecure.

By 2050, the global population is likely to increase by 35%, and to meet the growing demand for food, crop production will need to double. Given that agriculture is one of the biggest contributors to greenhouse gas emissions, this increase in crop production will also need to be environmentally sustainable.

As the impacts of climate change intensify and food demand increases, reducing food waste, building climate-resilient agricultural infrastructure, and improving agricultural productivity will all play a key role in reducing the levels of food insecurity sustainably.

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