New Hispanic Buying Power "Factoids"
by Carlos Pelay, Media Economics Group
HispanicMagazineMonitor Newsletter, July 24, 2002  

Chances are you may have heard or read news about the latest updates in Hispanic buying power estimates by the Selig Center for Economic Growth at the University of Georgia.

Chance are though that you haven't had time to delve into the full report which is available online here:

http://www.selig.uga.edu/forecast/GBEC/GBEC022Q.pdf

If not, then I hope you find the following list of "factoids" and other research nuggets useful and informative.  Enjoy!

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The Selig Center's estimates and projections of Hispanic buying power for 2002 and five-year projections to 2007 provide continued evidence of the growing economic clout of the Hispanic market.

For marketers and advertisers especially, the data "suggest that one general advertisement, product, or service geared for all consumers increasingly misses many potentially profitable market opportunities" as the Selig report puts it.

 

BUYING POWER: To begin with, what is "buying power"?

The straightforward non-economist definition is basically the value of "stuff" that consumers can afford to buy with their income after paying taxes.  This is "disposable income"  - a concept you may remember from Econ 101 (which I actually used to teach in a previous career/lifetime!).

Buying power is a better measure of spending potential than total personal income because it adjusts for state and regional differences in tax rates so it's a better estimate of the amount of income actually available for spending (also "buying power" sounds sexier in presentations).  

Most (95%) of buying power is actually spent on goods and services, but a small percentage is saved or paid out in interest payments or transfers abroad.


 

MAJOR FINDINGS:  Here are some of the major findings of the Selig report with respect to Hispanic consumers.  [Note that the report contains detailed estimates of Black, Native American, Asian, and White buying power as well.]
 

• In 2002, Hispanics will control about $580 billion in spending power.
  
   

• Hispanic spending power has more than doubled from $223 billion in 1990 and has grown by 18% since 2000 alone ($491 billion).
  
   

• Over the next five years, Hispanic buying power will grow by a total of 60% (average annual growth rate of 9.9%) to reach an estimated $926 billion by 2007.
  
   

• Hispanic buying power is growing at a much more rapid pace than buying power of either total non-Hispanic or any other racial or ethnic group.
  
   

• For example, over the next five years, Hispanic buying power will grow by 60% compared to 29% growth overall, 27% for whites, 32% for blacks, 41% for Native Americans, and 54% for Asian Americans.
  
   

• A major factor behind the increase in Hispanic buying power is the sheer growth (by natural increase and immigration) of the Hispanic population.  Over the next five years, the Hispanic population will increase by 29% compared to a total increase of 6%, an increase of 8% among Blacks, 13% among Native Americans, and 23% among Asian Americans.
  
   

• Other factors contributing to rapid increases in Hispanic buying power include a relatively young Hispanic population with, as the report states, "larger proportions of them either entering the workforce for the first time or moving up on their career ladders."
  
   

• In addition, the report notes "the increasing number of of Hispanics who are successfully starting and expanding their own businesses is another factor powering the growth."
  
   

REGIONAL PATTERNS IN BUYING POWER:

In 2002, the ten states with the highest aggregate Hispanic buying power are:

   1.  California ($170.7 billion)
   2.  Texas ($93.7b)
   3.  Florida ($52.4b)
   4.  New York ($48.1b)
   5.  Illinois (25.6b)
   6.  New Jersey ($22.3b)
   7.  Arizona ($17.5b)
   8.  Colorado ($13.0b)
   9.  Georgia ($11.3b)
  10.  New Mexico ($11.0b)


 

The states where Hispanic buying power has growing the fastest (1990 - 2002) are:

   1.  North Carolina (912%)
   2.  Arkansas (778%)
   3.  Georgia (711%)
   4.  Tennessee (655%)
   5.  Alabama (466%)
   6.  South Carolina (463%)
   7.  Nevada (443%)
   8.  Minnesota (418%)
   9.  Kentucky (415%)
  10.  Iowa (370%)


In 2002, the ten states with the highest Hispanic SHARE of total buying power are:

   1.  New Mexico (28.8%)
   2.  California (17.4%)
   3.  Texas (16.4%)
   4.  Arizona (14.3%)
   5.  Nevada (13.6%)
   6.  Florida (12.6%)
   7.  Colorado (9.8%)
   8.  New york (8.2%)
   9.  New Jersey (7.9%)
  10.  Illinois (7.1%)


BUYING POWER BY PRODUCT CATEGORIES:

Compared to the general population, Hispanic households spend a GREATER share of their disposable income on the following categories:

   - Groceries
   - Telephone services
   - Furniture
   - Mens and boys apparel
   - Women and girls apparel
   - Clothing for children under 2
   - Footwear
   - Vehicle purchases
   - Personal care products and services


I hope you have found the above factoids interesting and useful.

For more detailed information, you can download a free PDF copy of the full Selig report here:

http://www.selig.uga.edu/forecast/GBEC/GBEC022Q.pdf