Nain and Iheartthed :the jury is still out on the economic impacts of the Los Angeles riot [[which was not as severe as Detroit's 1967 event) but the facts about the severe riots of the 1960's are in. Several scholarly studies demonstrate that the cities that hosted severe riots took more than 20 years to recover in any way and that blacks in those cities were most negatively impacted financially over that 20 year period. So they got pretty far behind and, in Detroit, we never got caught up economically.

"In their second paper, The Economic Aftermath of the 1960s Riots: Evidence from Property Values [[NBER Working Paper No. 10493), Margo and Collins investigate the influence of riots on central city residential property values, especially black-owned properties. They find that the riots significantly depressed the median value of black-owned property between 1960 and 1970, with little or no rebound in the 1970s. The baseline estimates for severe-riot cities relative to small-or-no-riot cities range from approximately 14 to 20 percent for black-owned properties, and from 6 to 10 percent for all central-city residential properties. Household-level data for the 1970s indicate that the racial gap in property values widened substantially in riot-afflicted cities relative to others.

The exact mechanisms through which the riots affected economic activity over a long period of time are difficult to identify, but a large number of potentially reinforcing channels exist. Property risk might seem higher in central city neighborhoods than before the riots, causing insurance premiums to rise; taxes for income redistribution or more police and fire protection might increase, and municipal bonds may be more difficult to place; retail outlets might close; businesses and employment opportunities might relocate; middle and higher income households might move away; burned out buildings might be an eyesore; and so on. These damaging aspects of riots, the authors find, apparently outweighed outside assistance directed toward the riot areas in the wake of the disturbances."

From a publication of the National Bureau of Economic Research
http://www.nber.org/digest/sep04/w10243.html