Buying Power By Ethnic Group
With the release of the 2021 report, the Selig Center issued new estimates of minority buying power for the U.S. and all 50 states. The takeaway: Asian Americans, African Americans and Hispanics wield formidable economic clout. And companies can no longer take a one-size-fits-all approach to marketing consumer goods and services.
buying power by ethnic group
Hispanic buying power also has grown substantially over the last 30 years, from $213 billion in 1990 to $1.9 trillion in 2020. Hispanic buying power accounted for 11.1% of U.S. buying power in 2020, up from only 5% in 1990.
Over the same time period, Asian American buying power grew by 111%; the buying power for those of Hispanic ethnicity grew by 87%, Native American buying power grew by 67%, and African American buying power grew by 61%.
The Multicultural Economy report also includes national market estimates for seven of the largest Hispanic subgroups in the United States. Persons of Mexican origin constitute are the largest subgroup and account for 56% of Hispanic buying power in the U.S.
The sustained growth of the U.S. economy culminated in an estimated $14.8 trillion of buying power nationally in 2018, an increase of 100 percent since 2000 and 30 percent since 2010, with the biggest percentage gains occurring in minority markets.
While buying power is increasing across the country, the biggest gains come from Western states. The top 10 states with the largest percentage increase in total buying power since 2000 are Utah (156 percent), North Dakota (150 percent), Wyoming (143 percent), Texas (137 percent), Washington (131 percent), Arizona (131 percent), District of Columbia (130 percent), Montana (125 percent), Nevada (122 percent) and Idaho (118 percent).
Black buying powerAfrican-American buying power has seen impressive gains since the end of the last economic downturn, jumping from $961 billion in 2010 to an estimated $1.3 trillion in 2018. Since 2000, the African-American market has seen a 114 percent increase in buying power.
Ranked by the growth of Native American buying power since 2000, the top 10 states are Texas (279 percent), Rhode Island (264 percent), Pennsylvania (247 percent), New York (241 percent), Maryland (234 percent), Massachusetts (233 percent), Illinois (230 percent), Virginia (228 percent), Delaware (225 percent) and Utah (224 percent). Many of these states have relatively small, flourishing markets, but Texas and New York stand out as the third- and fifth-largest Native American consumer markets in the nation, respectively.
Hispanic buying powerThe $1.5 trillion Hispanic market is the largest ethnic market in the U.S., and includes more than one out of every six Americans. It is the second-fastest growing minority market in the U.S., rising by 212 percent, or $500 billion, since 2000.
Mexican-Americans comprise the largest of the Hispanic subgroups, accounting for $881 billion in buying power or 57.2 percent of the Hispanic total. Puerto Ricans are second-largest group in terms of buying power, commanding $158 billion or 10.3 percent of the Hispanic market. Central Americans are the third largest, with a $137 billion market share or 8.9 percent of the total. South Americans rank fourth, with 8.7 percent ($135 billion) of the U.S. Hispanic market, and Cuban-Americans are fifth, accounting for $83 billion.
Buying power is the total personal income of residents that is available for spending after taxes. It does not include money that is borrowed or saved from previous years. The Selig Center estimates its buying power statistics by applying economic modeling and forecasting techniques to data from various federal sources.
The report breaks down buying power by both racial and ethnic groups as well as by states and territories. The Asian and Hispanic markets are also segmented by country of origin. Population figures used in the study are taken from U.S. Census data, which counts every person regardless of immigration status.
The combined buying power of blacks, Asians and Native Americans is estimated to be $2.2 trillion in 2016, a 138 percent gain since 2000. The same time period saw the buying power of Asian-Americans grow by 222 percent, Native Americans by 164 percent and blacks by 98 percent. All of those markets are expanding faster than the buying power of whites, which increased by 79 percent.
Hispanic buying powerMore than one in six Americans claims Hispanic origin, which helps explain rapid gains over the past few years. From a buying power estimate of $495 billion in 2000, the group has increased its economic clout 181 percent to $1.4 trillion in 2016. That accounts for nearly 10 percent of total U.S. buying power in 2016 and means the U.S. Hispanic market is larger than the GDP of Mexico and bigger than the economies of all but 14 countries in the world.
The report provides national buying power estimates for seven selected groups of Hispanic consumers, with Mexican-Americans representing the largest group and accounting for $797 billion worth of buying power, followed by Puerto Ricans, who account for $146 billion.
Yet retail environments are one of the places where Black Americans say discrimination is prevalent, even as Black buying power grows. Industry watchers and activists say that problem remains persistent and retailers must do more to examine how they treat and cater to Black customers.
Black buying power was $1.4 trillion in 2019, according to the Selig Center for Economic Growth. That's higher than the gross domestic product of Mexico. It's projected to grow to $1.8 trillion by 2024.
U.S. minorities are making financial gains according to research from the University of Georgia. The latest Multicultural Economy Report shows every racial and ethnic minority group in America is advancing, but not at equal rates. Jeff Humphreys is Director of Economic Forecasting at the Terry College of Business.
New data from the 2019 Survey of Consumer Finances (SCF) show that long-standing and substantial wealth disparities between families in different racial and ethnic groups were little changed since the last survey in 2016; the typical White family has eight times the wealth of the typical Black family and five times the wealth of the typical Hispanic family.
This FEDS Note explores patterns in wealth holding by race and ethnicity, as well as some key issues related to the accumulation of wealth, using new data from the 2019 Survey of Consumer Finances (SCF). We first analyze total wealth among families classified, according to their self-identification during the interview, as White non-Hispanic, Black or African American non-Hispanic, Hispanic or Latino, and other or multiple race (we will henceforth refer to these groups as White, Black, Hispanic, and other, respectively).2 Wealth is defined as the difference between families' gross assets and their liabilities.3 We will describe patterns at the median (the typical household within each group) and at the mean (the average among households in each group).
Second, the types and number of families that make up each race or ethnicity group change over time as the underlying population of US families changes. Among other factors, population aging, changes to immigration flows, and the evolution of self-identification patterns alter the composition of each race or ethnicity group between surveys. For example, in the 2016 survey, the other or multiple race group was composed of 50 percent reporting more than one racial identification and 30 percent reporting Asian, whereas in 2019 these figures changed to 69 percent and 23 percent, respectively. Therefore, appropriately interpreting changes in a group's wealth, especially over longer time periods, requires acknowledging compositional shifts within each group. In particular, the robust growth in Hispanic wealth over the last two surveys and the marked slowdown of growth for other families in 2019 are at least partially attributable to compositional shifts in the types of families that make up these groups.
Wealth accumulation generally follows a predictable life-cycle arc, wherein families generally accumulate wealth during their working years, in preparation for retirement. Table 1 displays median wealth by age category based on the age of the reference person, separately, for White, Black, Hispanic, and other families.7 Following the expected life-cycle savings patterns, within each race or ethnicity group median wealth is sharply higher for middle-aged families (35 to 54) compared to young families (under 35) and is highest among older families (55 and over).
Within each age group, the SCF data indicate large differences in wealth across racial and ethnic groups. Even among young families who have had relatively little time to accumulate wealth, there are sizeable differences in wealth by race and ethnicity, most starkly between young Black and young White families. The median young Black family has almost no wealth ($600). In contrast, the median young White family has a wealth of $25,400. Young Hispanic and other families fall in between, with $11,200 and $13,500 in median wealth, respectively. Differences in parental resources may contribute to these early life cycle gaps, which we will discuss in the next section.
Life-cycle patterns of homeownership by age and by race and ethnicity are similar to the patterns of wealth (Figure 3). Homeownership rises sharply from young to middle-age regardless of race or ethnicity. At the same time, within each age group there are significant gaps in homeownership between White and non-White families, with the biggest gaps between White and Black families. Among young families, about 46 percent of White families own their home, compared to just 17 percent of Black families. This gap may partially reflect differences in parental wealth, as previous research has found that Black families are far less likely to receive down payment assistance from their parents, delaying transitions into homeownership (Charles and Hurst 2002).11 041b061a72