Hispanic Buying Power 1999-2009

A few days ago I ran into an awesome report named The Multicultural Economy, 1990-2009, from the Selig Center for Economic Growth. All 12 pages contain very valulable information, but wished to share with you what they said about the Latino Community:

The immense buying power of the nation’s Hispanic consumers is reshaping the retail and commercial landscape of the United States, and Selig Center projections reveal that Hispanics will control about $686 billion in spending power in 2004. In fact, Census 2000 showed that more than one person in eight who lives in the U.S. is of Hispanic origin. Moreover, the U.S. Hispanic population will continue to grow much more rapidly that the non-Hispanic population. By 2009, nearly one person out of every six living in the U.S. will be of Hispanic origin.

Over the nineteen-year period, 1990-2009, the nation’s Hispanic buying power will grow at a dynamic compound annual rate of 8.2 percent. (The comparable rate of growth for non-Hispanics is 4.9 percent.) In sheer dollar power, Hispanics’ economic clout will rise from $222 billion in 1990, to $504 billion in 2000, to $686 billion in 2004, and to $992 billion in 2009. The 2009 value will exceed the 1990 value by 347.1 percent—a percentage gain that is substantially greater than either the 148.5 percent increase in non-Hispanic buying power or the 158.8 percent increase in the buying power of all consumers. U.S. Hispanic buying power will grow faster than African-American buying power (203 percent) and Native American buying power (240 percent), but will grow at the same rate as Asian buying power (347 percent).

In 2009, Hispanics will account for 9 percent of all U.S. buying power, up from 5.2 percent in 1990. Due to this relatively brisk growth, Hispanic buying power ($923 billion) will exceed African-American buying power ($911 billion) in 2008.
Of the many forces supporting this substantial and continued growth, the most important is favorable demographics, but better employment opportunities also help to increase the group’s buying power. Because of both higher rates of natural increase and strong immigration, the Hispanic population is growing more rapidly than the total population, a trend that is projected to continue. Between
1990 and 2009, the Hispanic population will increase by 121 percent compared to 14.1 percent for the non-Hispanic population and the 23.7 percent gain for the total population.

The relatively young Hispanic population, with more of them either entering the workforce for the first time or moving up their career ladders, also argues for additional gains in buying power, which will be even more important in this decade than in the 1990s. In 2000, 35 percent of the Hispanic population was under age 18 compared to 26 percent of the total population, and the median age of Hispanics was 26 compared to 35 for the entire population. Clearly Hispanics’ spending patterns will determine the success or failure of many youth-oriented products and services. The increasing number of Hispanics who are successfully starting and expanding their own businesses is another potent force powering the growth of this consumer market, as evidenced by the 1.2 million Hispanic-owned firms in the U.S.

Hispanic refers to a person of Mexican, Puerto Rican, Cuban, Central or other Spanish/Hispanic/Latino culture or origin, and is considered an ethnic category, rather than a racial group. Persons of Hispanic origin therefore may be of any race, and since their culture varies with the country of origin, the Spanish language often is the uniting factor. Census 2000 indicates that the majority of Hispanics living in the U.S. are of Mexican origin (58.5 percent), which suggests that a great many Hispanics share similar backgrounds and cultural experiences.

This major group, which will comprise 14 percent of the country’s population in 2004, will have disposable income of $686 billion. In 2004, the ten states with the largest Hispanic markets, in order, are California ($198.5 billion), Texas ($119.3 billion), Florida ($63.7 billion), New York ($56.6 billion), Illinois ($31.3 billion), New Jersey ($26.1 billion), Arizona ($20.9 billion), Colorado ($15 billion), New Mexico ($13.7 billion), and Georgia ($10.9 billion).

Hispanics and their buying power also are much more geographically concentrated than non-Hispanics. California alone accounts for 28.9 percent of Hispanic buying power. The five states and the ten states with the largest Hispanic markets account for 68.4 percent and 81 percent of Hispanic buying power, respectively. In contrast, the five states with the largest non-Hispanic markets account for only 35 percent of total buying power and the ten largest non-Hispanic markets account for only 53.9 percent of total buying power.

The five states and the ten states with the largest total consumer markets account for only 37.7 percent and 55.7 percent of total buying power, respectively. The top ten states, as ranked by the rate of growth of Hispanic buying power over 1990-2004, are North Carolina (949 percent), Arkansas (924 percent), Georgia (710 percent), Tennessee (664 percent), Nevada (559 percent), Minnesota (541 percent), Alabama (515 percent), Nebraska (473 percent), South Carolina (456 percent), and Kentucky (453 percent). In market size, Georgia, Nevada, and North Carolina also respectively rank tenth, eleventh, and twelfth, so these states are three of the most attractive Hispanic markets in the nation.

Between 1990 and 2004, the share of buying power controlled by Hispanic consumers will rise from 5.2 percent to 8 percent, and the group’s share will rise in every state except Hawaii. In 2004, the ten states with the largest shares of total buying power that is Hispanic will be New Mexico (30.8 percent), Texas (19 percent), California (18.2 percent), Arizona (14.4 percent), Nevada (13.4 percent), Florida (13.1 percent), Colorado (10.1 percent), New York (9 percent), New Jersey (8.1 percent), and Illinois (7.8 percent). Nevada’s 7.1 percent shift in Hispanic market share, from 6.3 percent in 1990 to 13.4 percent in 2004 will be the nation’s largest. Texas will see its Hispanic market share climb from 13.2 percent to 19 percent, a gain of 5.8 percent, which will be a remarkable achievement for a state with such a large, established market. Hispanics’ share of the New Mexico market will rise by 5.2 percent, from 25.6 percent to 30.8 percent.

California’s Hispanics will claim 18.2 percent of the state’s buying power, up 4.9 percentage points from their 13.3 percent share in 1990. Florida’s large Hispanic population will claim 13.1 percent of that state’s buying power, 4.4 percent more than their 8.7 percent share in 1990.

Because of differences in per capita income, wealth, demographics, and culture, the spending habits of Hispanics as a group are not the same as those of the average U.S. consumer. The most recent Consumer Expenditure Survey indicates that Hispanic consumers spent in total only about 84 percent as much as the average non-Hispanic consumer and spent a much higher proportion of their income on goods and services—95.2 percent for Hispanics versus 85.9 percent for non-Hispanics.

Despite their lower average income levels, Hispanic households spent more on groceries, footwear, men’s and boys clothing, children’s clothing, gasoline and motor oil, and household textiles. Compared to the non-Hispanic population, Hispanics spent about the same proportion of their total outlays on restaurants, alcoholic beverages, housekeeping supplies, furniture, appliances, women’s and girls’ clothing, public transportation, and personal care products and services.

Compared to the non-Hispanic population, Hispanics spent substantially smaller proportions of total outlays (and substantially less money) on floor coverings, health care, entertainment, reading, education, life and other personal insurance, cash contributions, and tobacco products. The same survey found that Hispanic households are larger than non-Hispanic households (3.3 persons per household for Hispanics versus 2.4 persons for non-Hispanics); and have twice as many children under 18. On average, there are 1.7 vehicles per Hispanic household compared to 2 vehicles per non-Hispanic household. Also, only 48 percent of Hispanics are homeowners compared to 68 percent of non-Hispanics. Among homeowners, 69 percent of Hispanics have a mortgage compared to 60 percent of non-Hispanics.

Source: Selig Center for Economic Growth's The Multicultural Economy, 1990-2009