This is taken from the Hispanic section of the recently released report from the Selig Center at the University of Georgia. Jeffrey M. Humphreys is the author. Text follows the chart. For a full version of the report go to:
Hispanic Buying Power
The immense buying power of the nation’s Hispanic consumers continues to energize the nation’s consumer market, and Selig Center projections reveal that Hispanics will control about $736 billion in spending power in 2005. In fact, Census 2000 showed that more than one person in eight who lives in the U.S. is of Hispanic origin, and the U.S. Hispanic population continues to grow much more rapidly that the non-Hispanic population. By 2010, nearly one person out of every six living in the U.S. will be of Hispanic origin.
Over the twenty-year period, 1990-2010, the nation’s Hispanic buying power will grow dynamically. In sheer billion in 1990, to $490 billion in 2000, to $736 billion in 2005, and to $1,087 billion in 2010. The 2010 value will exceed the 1990 value by 413 percent—a percentage gain that is far greater than either the 165 percent increase in non-Hispanic buying power or the 177 percent increase in the buying power of all consumers. U.S. Hispanic buying power will grow faster than African-American buying power (222 percent), Native American buying power (251 percent), and Asian buying power (397 percent).
In 2010, Hispanics will account for 9.2 percent of all U.S. buying power, up from 5 percent in 1990. Due to this brisk growth, Hispanic buying power ($860 billion) will exceed African American buying power ($856 billion) in 2007.
Of the myriad 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 2010, the Hispanic population will increase by 118.9 percent compared to 14.8 percent for the non-Hispanic population and the 24.2 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 on their career ladders, also argues for additional gains in buying power. Hispanics’ spending patterns already help to determine the success or failure of many youth oriented products and services. In 2004, 34 percent of the Hispanic population was under age 18 compared to 25 percent of the total population. Also, in 2004, only 5.2 percent of Hispanics were over 65, compared to 12.4 percent of the total population.
The increasing number of Hispanic business owners is another potent force powering this consumer market. The Survey of Minority-Owned Business Enterprises released by the U.S. Department of Commerce showed that the number of Hispanic firms is growing more than four times faster than the number of all U.S. firms, and that their receipts also rose more quickly than those of all firms. This jump in entrepreneurial activity, coupled with a rising level of educational attainment, illustrates Hispanics’ upward mobility. The U.S.
Census Bureau indicates that, in 2003, 57 percent of Hispanics over age 25 had a high school diploma compared to 53 percent a decade ago. The proportion with a bachelor’s
degree increased from 9 percent to 11 percent. The Census Bureau cautions, however, that levels of educational attainment for Hispanics are lower than those for non-Hispanic
whites, blacks, and Asians largely because of the vast number of less educated foreign-born Hispanics. Only 45 percent of foreign-born Hispanics have a high school diploma compared to 74 percent of U.S.-born Hispanics. Hispanic refers to a person of Mexican, Puerto Rican, Cuban 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. Nonetheless, spending patterns differ significantly based on country of origin, and the composition of the nation’s Hispanic population is changing. The proportion of Mexicans is dropping, while the numbers of people from Cuba, Central and South America, and other Spanish-speaking areas continues to rise.
This major group, which will comprise 14.3 percent of the country’s population in 2005, will have disposable income of $736 billion. In 2005, the ten states with the largest Hispanic markets, in order, are California ($202.7 billion), Texas ($127.4 billion), Florida ($75.1 billion), New York ($62.7 billion), Illinois ($32.8 billion), New Jersey ($28.4 billion), Arizona ($24.2 billion), Colorado ($17.1 billion), New Mexico ($14.2 billion), and Georgia ($10.6 billion). Hispanics and their buying power are much more geographically concentrated than non-Hispanics. California alone accounts for 28 percent of Hispanic buying power. The five states and the ten states with the largest Hispanic markets account for 68 percent and 81 percent of Hispanic buying power, respectively. In contrast, the five states with the largest non-Hispanic markets account for only 38 percent of total buying power and the ten largest non-Hispanic markets account for only 55 percent of total buying power. The top ten states, as ranked by the rate of growth of Hispanic buying power over 1990-2005, are North Carolina (882 percent), Arkansas (868 percent), Georgia (696 percent), Tennessee (668 percent), Nevada (641 percent), Alabama (569 percent), Minnesota (547 percent), Kentucky (527 percent), North Dakota (499 percent) and South Carolina (498 percent). In market size, Georgia, Nevada, and North Carolina also rank tenth, eleventh, and fifteenth, respectively, so, these states are three of the most attractive Hispanic markets in the nation.
Between 1990 and 2005, the share of buying power\ controlled by Hispanic consumers will rise from 5 percent to 8.1 percent, and the group’s share will rise in every state. In 2005, the ten states with the largest Hispanic market shares will be New Mexico (29.5 percent), Texas (19.2 percent), California (17.2 percent), Arizona (15.2 percent), Florida (14.3 percent), Nevada (13.2 percent), Colorado (10.8 percent), New York (9.5 percent), New Jersey (8.6 percent), and Illinois (8.1 percent). Nevada’s 7 percent shift in Hispanic market share, from 6.2 percent in 1990 to 13.2 percent in 2005 will be the nation’s largest. Texas will see its Hispanic market share climb from 12.4 percent to 19.2 percent, a gain of 6.8 percent, which is a remarkable for a state with such a large, established market. Hispanics’ share of Florida’s market will rise by 5.6 percent, from 8.7 percent to 14.3 percent. Arizona’s Hispanics will claim 15.2 percent of the state’s buying power, up 5.4 percentage points from their 9.8 percent share in 1990. New Mexico’s Hispanic population will claim 29.5 percent of that state’s buying power, 5.2 percent more than their 24.4 percent share in 1990. Because of differences in per capita income, wealth, demographics, and culture, the spending habits of Hispanics as a group differ from the average U.S. consumer. The most recent Consumer Expenditure Survey indicates that Hispanic consumers spent in total only about 83 percent as much as the average non-Hispanic consumer and spent a much higher proportion of their after-tax income on goods and services. Despite their lower average income levels, Hispanic households spent more on groceries, telephone services, furniture, major appliances, men’s and boys’ clothing, children’s clothing, and footwear. Also, Hispanics spent a higher proportion of their money on eating out, housing, and gas and motor oil. They spent about the same amounts as non-Hispanics on alcoholic beverages, natural gas and electricity, housekeeping supplies, 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 health care, entertainment, education, and personal insurance and pensions.
The same survey found that Hispanic households are larger than non-Hispanic households (3.3 persons per household versus 2.4 persons for non-Hispanics), and have twice as many children under 18. On average, there are 1.6 vehicles per Hispanic household compared to 2 vehicles per non-Hispanic household. Also, 2004 data show that only 48 percent of Hispanics are homeowners compared to 72 percent of non-Hispanics. In 1994, only 41 percent of Hispanics were homeowners.