The Multicultural Economy 2005: America's Minority Buying Power
September 1, 2005
Backed by fundamentally strong national and regional economies, U.S. consumers will continue to have substantial but varying annual gains in after-tax income, which powers their spending on goods and services. The Selig Center's estimates and projections of buying power for 1990-2010 show that minorities-African Americans, Asians, Native Americans, and Hispanics-definitely share in this success, and together wield formidable economic clout.
The numbers are impressive. In fact, both the African- American and the Hispanic consumer markets already are larger than the entire economies (GDP measured in US dollars) of all but nine countries in the world. Moreover, by 2010, it is very likely that the buying power of African Americans and Hispanics will exceed the GDP of Canada- which is the ninth largest economy in the world.
The buying power data presented here and differences in spending by race and/or ethnicity suggest that as the U.S. consumer market becomes more diverse, advertising, products, and media must be tailored to each market segment. With this in mind, entrepreneurs, established businesses, marketing specialists, economic development organizations, and chambers of commerce now seek estimates of the buying power of the nation's major racial and ethnic minority groups. Going beyond the intuitive approaches often used, the Selig Center's estimates provide a timely, cost-efficient, and quantitative way to assess the size and vitality of the national, state, and sub-state racial and ethnic markets. This study provides a comprehensive statistical overview of the buying power of African Americans, Asians, Native Americans, and Hispanics for the U.S. and all the states. Data are provided for 1990- 2010. Majority-or White-buying power also is reported. [Researchers should note that multiracial buying power is estimated only as a residual, and therefore the estimates are not discussed and should be used very cautiously.]
Simply defined, buying power is the total personal income of residents that is available, after taxes, for spending on virtually everything that they buy, but it does not include dollars that are borrowed or that were saved in previous years. It is not a measure of wealth, and it does not include what tourists spend during their visits. Unfortunately, there are no geographically precise surveys of annual expenditures and income of all the nation's major racial and ethnic groups. Even estimates of expenditures by race or ethnicity are difficult to find, especially for individual states and counties.
The Selig Center addresses this problem by providing estimates of African American, Native American, Asian, White, Hispanic, and non-Hispanic buying power from 1990- 2005 for the nation, the fifty states, and the District of Columbia. Also, five-year projections (2006-2010) are provided for all groups. Estimates for Georgia's metropolitan areas and counties and for Florida's metropolitan areas and counties also are included. These current dollar (unadjusted for inflation) estimates and projections indicate the growing economic power of various racial or ethnic groups; measure the relative vitality of geographic markets; help to judge business opportunities for start-ups or expansions; gauge a business's annual sales growth against potential market increases; indicate the market potential of new and existing products; and guide targeted advertising campaigns.
The estimates for 1990-2004 supersede those previously published by the Selig Center. The revised data for those years, as well as the preliminary estimates for 2005-2010, should be considered only as the first step toward a more comprehensive analysis of the market. Anyone considering the investment of substantial capital in a new enterprise, a new product line, or a new advertising campaign will need extensive feasibility analysis to determine market opportunities more precisely.
This article only reports buying power estimates and population data for 1990, 2000, 2005, and 2010, but annual data for the entire period, 1990-2010, are available on the CD that is included in the full package.
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The Multicultural Economy 2005: America's Minority Buying Power" Jeffrey M. Humphreys, Selig Center for Economic Growth, University of Georgia. September 2005.