Existing research highlights significant racial and ethnic disparities in economic hardship, leading to reduced consumer well-being. Financial capability is positively associated with financial well-being, suggesting that enhanced financial capability should correlate with a reduced risk of economic hardship, thereby decreasing these disparities. However, the role of financial capability in mitigating economic hardships during crises, such as the COVID-19 pandemic, remains underexplored. This study addresses this gap by utilizing decomposition analysis of the 2022 Survey of Consumer Finances data to examine whether financial capability reduces racial and ethnic disparities in economic hardship during the pandemic._x000D_ The findings of this research are crucial for policymakers, financial educators, community organizations, and other stakeholders dedicated to addressing financial hardship and promoting economic equity. By implementing targeted policies and programs that cater to the specific needs of minority groups, these stakeholders can work towards reducing financial disparities and promoting equity. This study not only advances our understanding of the dynamics between financial capability and economic hardship but also provides practical insights to improve consumer well-being and foster economic equity.
