Hispanics will top all U.S. minority groups for purchasing power by 2007
Hispanic buying power in the United States will draw even with African-American buying power in 2006 -- at just under $800 billion -- and is projected to exceed it in 2007, according to a report on minority buying power released Friday by the Selig Center for Economic Growth at the University of Georgia's Terry College of Business.
Hispanics actually surpassed blacks as the nation's largest minority group five years ago, based on population counts. But, in terms of spending power, 2007 will mark the first year that Hispanics control more disposable personal income than any other U.S. minority group.
The Selig Center estimated Hispanic buying power will be $863.1 billion in 2007, an 8.1 percent increase over 2006, while black buying power will reach $847 billion in 2007, a 6 percent increase.
"The economic clout of Hispanics has risen from $212 billion in 1990, when I first started doing this study, to $798 billion this year and I expect it to be almost $1.2 trillion five years from now," said Jeff Humphreys, director of the Selig Center. "That's more than 450 percent growth from 1990 to 2011. Non-Hispanic buying power is growing closer to a rate of 176 percent over the same period.
"Still, even as Hispanic buying power overtakes African American buying power at the national level, it is important to recognize that in the majority of states the African American market will continue to be much larger than the Hispanic market," Humphreys said. "This insight reflects the fact that Hispanics and their buying power are much more geographically concentrated than non-Hispanics or African Americans. For example, California alone accounts for 27 percent of all Hispanic buying power in the U.S."
The Selig Center's annual report includes state-by-state projections of buying power for the nation's three most populous racial groups, as well as Hispanics, who are categorized by the U.S. Census as an ethnic minority and not a racial minority. Buying power, also referred to as disposable income, is the total personal income available for spending on goods and services after taxes.
The remarkable gains in Hispanic buying power are largely explained by immigration and population growth, Humphreys said. Between 1990 and 2011, the beginning and ending boundaries of the study, Hispanic population is expected to increase 126.4 percent, compared with 15.4 percent for the nation's non-Hispanic population.
Better employment opportunities and higher business ownership are the other driving forces boosting the Hispanic consumer market. The number of Hispanic-owned businesses grew by 31 percent between 1997 and 2002, Humphreys said, which is triple the 10 percent rate of growth for all U.S. businesses.
Additional insights from this year's report include:
Asian buying power has the second fastest projected rate of growth, behind Hispanic buying power. Asian buying power will grow 434 percent between 1990 and 2011 (versus the 457 percent gain for Hispanics). Humphreys noted that "Asian buying power is attaining critical mass in a growing number of states." In 2000, only six states had more than $10 billion in Asian buying power. As of 2006, 11 states have reached that benchmark, on its way to 14 states by 2011.
However, California still accounts for 33 percent of the nation's Asian consumer market. Asian buying power in California stands out as the only racial minority market at the state level to exceed $100 billion (totaling $140.5 billion). [California's Hispanic market is larger still ($214.5 billion), but it is defined as an ethnic minority.]
The African American consumer market is more widespread geographically than the Hispanic or Asian markets, but also large enough to represent "an attractive customer segment in many of the states," Humphreys said. Five states had black consumer markets estimated at more than $50 billion in total market size for 2006: New York ($75.6 billion), Texas ($58.1 billion), California ($55.7 billion), Georgia ($54.4 billion) and Florida ($52.7 billion). From 1990 to 2006, black buying power has grown fastest in western states: Nevada (449 percent), Idaho (434 percent), Utah (386 percent) and Montana (368 percent).
Buying power for Native Americans, the smallest of the four minority groups included in the Selig Center report, will total $53.9 billion in 2006 and rise to $73 billion in 2011. Native American buying power in 1990 was $19.7 billion. That projects to 270 percent growth in buying power from 1990 to 2011, which exceeds the estimated growth rate for U.S. buying power as a whole (190 percent) over the same period. But Native American buying power will account for only 0.6 percent of all U.S. buying power in 2011.
- Georgia will become the 10th largest Hispanic market in the United States by 2006, at $12.4 billion, compared with its 1990 rank of 19th. But the black consumer market in Georgia, estimated at $54.4 billion for 2006, still far exceeds the size of the Hispanic market. Black consumers account for one out of every five dollars spent by Georgia residents (or 20.5 percent of the state's total buying power). Asian buying power in Georgia is estimated to have grown 565 percent between 1990 ($1.1 billion) and 2006 ($7.4 billion). That impressive growth rate is the third fastest in the country, surpassed by only Nevada (762 percent) and North Carolina (579 percent).
Available for purchase from the Selig Center as a pre-packaged book and CD, "The Multicultural Economy" estimates minority buying power by applying economic modeling and forecasting techniques to data from various U.S. government sources. The model developed by the Selig Center integrates statistical methods used in economic forecasting with those of marketing research.
In addition to the state-by-state breakdowns, the 2006 report also projects minority buying power for all metropolitan areas and counties in Georgia and Florida.
The Selig Center for Economic Growth was established in 1990 in memory of Atlanta entrepreneur Simon S. Selig Jr., a 1935 Terry College graduate, by his son, Steve Selig, and daughter, Cathy Selig, both of Atlanta. The Selig Center also publishes the college's annual "Georgia Economic Outlook" forecast and produces commissioned studies for the state and the private sector. The Selig Center's Web site is http://www.selig.uga.edu/.
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